THE SA ATTORNEYS’ JOURNAL

Does the life of a rule nisi automatically extend on

postponement of return date?

Step ahead carefully – the uncertainty of unfair

contractS continueS

Audi alteram partem vis-à-vis precautionary suspension

Dismissalfor incapacity

Handling of trust money –dealing with the obligations of a trust account legal practitioner

Another six basic universal principles applicable to the

conduct of a candidate legal practitioner

Clearing up theconfusion

on evictions

The High Court still has jurisdiction in

labour matters

MAY 2019

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A B E S P O K E S O L U T I O N F O R M A N A G I N G D I S A B I L I T Y A W A R D S I N P E R S O N A L I N J U R Y C A S E S

DE REBUS – MAY 2019

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THE SA ATTORNEYS’ JOURNAL

Does the life of a rule nisi automatically extend on

postponement of return date?

Step ahead carefully – the uncertainty of unfair

contractS continueS

Audi alteram partem vis-à-vis precautionary suspension

Dismissalfor incapacity

Handling of trust money –dealing with the obligations of a trust account legal practitioner

Another six basic universal principles applicable to the

conduct of a candidate legal practitioner

Clearing up theconfusion

on evictions

The High Court still has jurisdiction in

labour matters

MAY 2019

May 2019 Issue 595 ISSN 0250-0329

CONTENTS

Regular columns

Editorial 3

Letters to the editor 4

Book announcement 5

Practice management Handling of trust money – dealing with the obligations

of a trust account legal practitioner 6

Another six basic universal principles applicable to the

conduct of a candidate legal practitioner 8

Practice note Does the life of a rule nisi automatically extend on

postponement of return date? 10

Clearing up the confusion on evictions 11

The law reports 19

New legislation 24

Employment law update

Dismissal for incapacity 26

Audi alteram partem vis-à-vis precautionary

suspension 26

Recent articles and research 27

THE SA ATTORNEYS’ JOURNAL

THE SA ATTORNEYS’ JOURNAL

13

Articles on the De Rebus website:

2018 prize winners for best articles in De Rebus

Spoor & Fisher wins at the Managing Intellectual Property

EMEA Awards

Business rescue discussed at Werksmans seminar

Women in Law Awards officially launched

LPC releases the results of the provincial council elections

ADF Task Team takes over investigations and legal

proceeding after misappropriation of funds

Legal Practitioners must be advocates of alternative dispute resolution

6 16

26

26 8

11

10

DE REBUS – MAY 2019

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FEATURES EDITOR: Mapula Sedutla

NDip Journ (DUT) BTech (Journ) (TUT)

PRODUCTION EDITOR: Kathleen Kriel

BTech (Journ) (TUT)

EDITORIal COmmITTEE: Giusi Harper (Chairperson), Peter Horn, Denise Lenyai,

Maboku Mangena, Mohamed Randera

EDITORIal OffICE: 304 Brooks Street, Menlo Park, Pretoria. PO Box 36626, Menlo Park 0102. Docex 82, Pretoria.

Tel (012) 366 8800 Fax (012) 362 0969. E-mail: derebus@derebus.org.za

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CONTENTs: Acceptance of material for publication is not a guar-antee that it will in fact be included in a particular issue since this depends on the space available. Views and opinions of this jour-nal are, unless otherwise stated, those of the authors. Editorial opinion or comment is, unless otherwise stated, that of the editor and publication thereof does not indicate the agreement of the Law Society, unless so stated. Con tributions may be edited for clarity, space and/or language. The appearance of an advertise -ment in this publication does not neces sarily indicate approval by the Law Society for the product or service ad ver tised.

De Rebus editorial staff use online products from:• lexisNexis online product: MyLexisNexis. Go to: www.lexis-nexis.co.za; and• Juta. Go to: www.jutalaw.co.za.

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aCCOUNT INqUIRIEs: David MadonselaTel (012) 366 8800 E-mail: david@lssa.org.za

CIRCUlaTION: De Rebus, the South African Attorneys’ Journal, is published monthly, 11 times a year, by the Law Society of South Africa, 304 Brooks Street, Menlo Park, Pretoria. It circulates free of charge to all practising attorneys and candidate attorneys and is also available on general subscription.

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De Rebus subscribes to the Code of Ethics and Conduct for South

African Print and Online Media that prescribes news that is truthful,

accurate, fair and balanced. If we do not live up to the Code, contact the Public Advocate at (011) 484 3612

or fax: (011) 484 3619. You can also contact our Case Officer on

khanyim@ombudsman.org.za or lodge a complaint on the Press

Council website: www.presscouncil.org.za

Member ofThe Audit Bureau of

Circulations of Southern Africa

Step ahead carefully – the uncertainty of unfair contracts continues

13

Legal practitioner, Igor Szopinski writes that in the case: Botha and Another v Rich NO and Others

2014 (4) SA 124 (CC) the Constitu-tional Court (CC) held that the ex-ercise of a right of cancellation in a contract of purchase in in-stalments of immovable prop-erty was unenforceable on the ground that to enforce it would be ‘unfair’ in the cir-cumstances because of its disproportionately adverse consequences for the purchas-er. In reaching its decision that the

enforcement of the

The High Court still has jurisdiction in labour matters

16

Before the Constitutional Court (CC) decision in Chirwa v Transnet Limited and Others 2008 (3) BCLR 251 (CC) it was easy to determine whether the High Court in a giv-

en labour matter has jurisdiction or not. This is because the CC decision in Fredericks and Others v MEC for Education and Training, Eastern Cape and Others 2002 (2) SA 693 (CC) clari-fied the issue. The fine principle in the Fredericks case, which is underpinned by a lucid analysis of the Labour Relations Act 66 of 1995 (the LRA), was understandably, confirmed by the Supreme Court of Appeal (SCA) in Fedlife Assurance Ltd v Wolfaardt 2002 (1) SA 49 (SCA). Both decisions agree that the High Court has concurrent jurisdiction with the Labour Court (LC) in matters, which are dealt with in s 157(2) of the LRA. In this article, legal practitioner Bayethe Maswazi, examines the controversies relating to the jurisdiction of the High Court in labour matters, which have had many practitioners being careful – sometimes too careful – not to take matters con-cerning labour disputes before the High Court. Mr Maswazi examines the various concepts, which are important in the determination of the issue, and the problem precipitated by the misunderstanding of these concepts, particularly in rela-tion to the Chirwa and Gcaba v Minister for Safety and Security and Others 2010 (1) SA 238 (CC) cases.

contracting right to cancellation would be ‘unfair’ in the cir-cumstances, the court relied on a somewhat ‘free-floating’ notion of fairness. Mr Szopinski writes that it is necessary to examine whether the CC’s judgment is correct in the first place and whether the underlying reasoning of the court is acceptable to justify the outcome.

DE REBUS – MAY 2019

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Would you like to write for De Rebus?

De Rebus welcomes article contribu-tions in all 11 official languages, espe-cially from legal practitioners. Practi-tioners and others who wish to submit feature articles, practice notes, case notes, opinion pieces and letters can e-mail their contributions to derebus@derebus.org.za.

The decision on whether to publish a particular submission is that of the De Rebus Editorial Committee, whose decision is final. In general, contribu-tions should be useful or of interest to practising attorneys and must be original and not published elsewhere. For more information, see the ‘Guide-lines for articles in De Rebus’ on our website (www.derebus.org.za). • Please note that the word limit is 2000 words.• Upcoming deadlines for article sub-missions: 17 June, 22 July and 19 Au-gust 2019.

Conveyancing examinations: A source of gatekeeping?

EDITORIAL

Mapula Sedutla – Editor

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Conveyancing examinations were a hot topic of discus-sion at both the recently held Law Society of South Africa (LSSA) and National Association of Democratic

Lawyers (NADEL) annual conferences. At issue was the notion that the convey-ancing qualification examinations were used as a source of gatekeeping into the specialised field. This notion is based on the high failure rate of the conveyancing examinations.

In May and September 2018, for exam-ple, a total of 1 221 students wrote the conveyancing examinations, of that num-ber only 281 passed. Students who write the conveyancing examinations write two papers on the same day. The first paper is a practical test, which is designed to test the competence of a student mainly in the practice and procedure of conveyanc-ing and consists of questions, which re-quire students to draft deeds, certificates, applications, consents, agreements, et-cetera. Two hundred marks are awarded for this paper. The second paper, which is theoretical, is designed to test the stu-dent’s knowledge of the various statutes, ordinances and decided cases, applicable to conveyancing. One hundred marks are awarded for this paper. To pass the ex-amination, a student needs an aggregate of 50% for both written papers.

Students who achieve an aggregate of 40% to 49% fail the examination but qual-ify for an oral examination. After the oral examination, a student who achieves an aggregate of less than 40% fails and is required to write again in the following examination session (May or September).

Discussions at the NADEL conference During the NADEL conference, convey-ancing examiner, Kuki Seegobin noted that the biggest challenge with the con-veyancing examination is that it is an ‘application’ examination. Ms Seegobin added that one of the challenges exam-iners come across, is that legal practi-tioners do not have practical experience of conveyancing and they are not able to understand what is required of them.

Another conveyancing examiner, Pumla Mncwango shared the story of how she volunteered at a law firm’s conveyancing department for an hour per day, for eight months before she wrote her conveyanc-ing examination. Ms Mncwango said the challenge is that most legal practitioners go into the examination unprepared and with the mentality that by only preparing

two months in advance for the examina-tion, they will pass.

The attendants at the NADEL confer-ence noted that the conveyancing field remains untransformed and the examin-ers for the course remain dominated by white males. The conference also noted that the conveyancing question papers are still written in English and Afrikaans over long hours and that the course con-tinues to reflect a high failure rate.

In view of the above issues raised at the NADEL conference, NADEL resolved the following:• The conveyancing examinations must

be reviewed immediately.• The examination papers must be writ-

ten in English only.• The examination must be written over

three days and the structure of exami-nations, without compromising the quality, must be changed.

• The conveyancing course must be pro-vided by the LSSA’s Legal Education and Development (LEAD) division and be made more accessible.

• Alternative forms of assessment must be investigated, which include the for-mat for candidate legal practitioners undergoing training at the law schools.

• The examiners must reflect transfor-mation and more black practitioners, including women and young practi-tioners, must be appointed.

• A thorough investigation must be launched to establish the reasons why there is a high failure rate in the con-veyancing course.

Discussions at the LSSA conference During the LSSA annual conference, at-tendees raised a point that the convey-ancing examinations are used as a source of gatekeeping because the conveyanc-ing field is predominantly dominated by white males. Ms Mncwango responded by saying the notion of gatekeeping is a perception. She added that she had the same perception prior to her writing the examination. She wrote the examination once and passed. She pointed out that when students write the examination, they do not indicate their race or their name but write their examination num-ber instead.

A question was raised at the LSSA conference, whether conveyancing work should continue to be conducted by le-gal practitioners, the LSSA resolved that conveyancing work should indeed be conducted by legal practitioners. Deal-ing with the conveyancing examination

duration, the LSSA resolved to support the resolution tabled at the NADEL con-ference that the two papers be written on separate dates.

In view of the issues raised at both the NADEL and the LSSA conferences, LSSA has set up a conveyancing task team to deal with the issues raised by the organ-ised profession. One of the duties of the task team is to engage with the LSSA’s LEAD division to completely overhaul the conveyancing course training, con-sidering key elements in conjunction with the examiners and the LSSA Con-veyancing Committee.

DE REBUS – MAY 2019

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LETTERS

Unintended consequences of the LPA on the admis-sion applications

Unintended consequences (sometimes un-anticipated consequences or unforeseen consequences) are outcomes that are not the ones foreseen and intended by a pur-poseful action.

This letter is written to highlight the postponement of admission applications of legal practitioners in the Gauteng Divi-sion of the High Court in Pretoria, which were issued after 1 November 2018, pend-ing the outcome of the Full Bench judg-ment of the Gauteng Local Division of the High Court in Johannesburg.

On 18 February, one of our candidate legal practitioners attended the Gauteng Division to have his admission applica-tion heard under case number 88173/18.

Despite having satisfied all the require-ments under the Legal Practice Act 28 of 2014 (LPA) for admission and enrolment as a legal practitioner, save for those re-quirements yet to be prescribed by the minister, the application was postponed sine die due to the fact that same was is-sued after 1 November 2018.

On Monday, 25 February, several ap-plicants were admitted as legal practi-tioners at the Gauteng Division, despite

only becoming eligible to qualify as le-gal practitioners and/or having their applications issued after 1 November 2018. It is our understanding that legal practitioners in other divisions of the High Court in other provinces are being admitted and enrolled.

The apparent lack of uniformity among the courts, who continue to admit ap-plicants during this uncertain period, is severely prejudicial to those applicants whose applications were postponed, po-tentially to a date several months away.

The barriers which prevent entry into the legal profession, are well document-ed. This new seemingly artificial barrier which impedes candidate legal practi-tioners who diligently served their arti-cles under the now repealed Attorneys Act 53 of 1979, needs to be urgently ad-dressed. It can never be that due to the lack of clarity on the provisions of the LPA and/or the failure to have clear tran-sitional provisions to cater for this situ-ation that candidate legal practitioners should be prejudiced.

Furthermore, having admissions placed on hold for such a prolonged period is hindering on the rights of applicants to make advancements in their legal careers, and consequently affecting the ability to be gainfully employed.

This anomaly needs to be addressed as

it is prejudicial to a class of new entrants to the legal profession and contributes to the perception of inequality, which may or may not be correct. Equality is a cornerstone of our new democracy. We must ensure that all legal practitioners, including aspiring candidate legal prac-titioners, are accorded equality of status and opportunity within the profession. The object of the quest for equality is not to seek special dispensation to al-low their admission, but rather to ensure that all legal practitioners are treated with dignity and equality no matter where and when they served their arti-cles of clerkship.

A recommendation would be to estab-lish a special motion court for applicants affected by the postponement, in an at-tempt to speedily deal with the backlog of postponed applications and to reduce the severe prejudice already suffered as a result thereof.

In closing, the moratorium on the hearing of admissions has to be lifted so we have the semblance of uniform-ity and equality in our division and our profession and in so doing address the unintended consequences of the LPA.Update on the issueBe advised that I addressed the concerns detailed in the letter above to the two respective Judge Presidents of the High

LETTERSTO THE EDITOR

Letters are not published under noms de plume. However, letters from practising attorneys who make their identities and addresses known to the editor may be considered for publication anonymously.

PO Box 36626, Menlo Park 0102 Docex 82, Pretoria E-mail: derebus@derebus.org.za Fax (012) 362 0969

DE REBUS – MAY 2019

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q

Courts in this Division. The response re-ceived indicated that applications would be fast-tracked on a positive decision made by the Full Bench in Ex Parte: Goos-en (GJ) (unreported case no 2018/2137, 25-3-2019) (Sutherland J). The Full Bench pronounced on the issue on 25 March.

On 26 March, I addressed a further let-ter to the Pretoria Judge President indi-cating that I was now of the view that the self-imposed prohibition to admissions should be lifted in keeping with the let-ter of 19 March.

I am pleased to advise that two of our candidate legal practitioners have now been admitted. Be that as it may, I be-

BOOK ANNOUNCEMENTS

lieve that the issue highlighted in the letter is still relevant and should be cir-culated to raise awareness. I am certain that a number of candidate legal practi-tioners effected by the Bar to admissions are unaware of the Full Bench decision. The issue has been addressed with the pronouncement on s 115 of the Legal Practice Act 28 of 2014 and the morato-rium has subsequently been lifted.

Shaun Hangone, legal practitioner, Johannesburg

A copy of the judgment can be found on www.derebus.org.za– Editor

Book announcement

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Law Clinics and the Clinical Law Movement in South Africa

By Jobst Bodenstein (ed) Cape Town: Juta

(2018) 1st editionPrice R 795 (incl VAT)573 pages (soft cover)

This book provides guidelines to assist clinicians and universities with the development of the clini-

cal legal education curriculum, teaching methodology and the administration of a university-based law clinic. The book offers a wide range of guidance on many components of clinical legal education,

Do you have something that you would like to share with the

readers of De Rebus?

De Rebus welcomes letters of 500 words or less. Letters that are

considered by the Editorial Committee deal with topical and relevant issues

that have a direct impact on the profession and on the public.

Send your letter to: derebus@derebus.org.za

including integrating clinical legal education with the requirements of higher education and the legal profes-sion, setting goals and objectives for a clinical legal education programme, and an examination of the basic prin-ciples of teaching and learning as well as assessment.

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DE REBUS – MAY 2019

PRACTICE MANAGEMENT – LEGAL PRACTICE

By Rampela Mokoena

Handling of trust money – dealing with the obligations of a trust

account legal practitioner

The promulgation of the Le-gal Practice Act 28 of 2014 (the Act) and the subse-quent South African Legal Practice Council Rules (the Rules) made under the au-

thority of ss 95(1), 95(3) and 109(2) of the Act create requirements, whether ex-pressly or by necessary implication, for a trust account legal practitioner. This article touches on those requirements expounded from ch 7 of the Act. While obligations relating to Inspections of ac-counting records in terms of r 50 and Ac-counting Rules in terms of r 54 equally form part of ch 7, these are not directly discussed in this article.

DiscussionThe departure in relation to the obliga-tions of a trust account legal practitioner is that a trust account legal practitioner must be in possession of a Fidelity Fund Certificate (FFC), which must indicate that the legal practitioner concerned is obliged to practice subject to the Act (s 84(1) and (4)). If a trust account le-gal practitioner is not in possession of an FFC, no legal practitioner or person employed by that legal practitioner may receive or hold funds or property be-longing to any person, nor may they take a deposit on account of fees or disburse-ments in respect of legal services to be rendered (s 84(2) and (3)).

Trust account legal practitioners prac-tising for the first time must complete a legal practice management course within the period and after payment of a fee determined by the Legal Practice Coun-cil (LPC) (s 85(1)(b) read with r 27(1)). In the case of a first time applicant who is required to be in possession of an FFC, proof is required to be submitted to the LPC that the applicant has completed the legal practice management course – re-ferred to in s 85(1)(b) of the Act – and the proof of completion must accompany the application (r 47.7.1). If an applicant was in possession of an FFC in the previ-ous year, the certificate of an auditor – in respect of an audit of the trust account legal practitioner’s trust bank accounts that was performed for the year ended immediately prior to the application – must have been submitted or proof of such submission must accompany the application (r 47.7.2). An FFC is valid un-til 31 December of the year in respect of which it was issued (s 85(8)).

An application to the LPC for an FFC is made by truly, accurately and com-pletely setting out the information and particulars provided for in the form, and completing the application form in every respect, in the manner determined in the rules (r 47.3) – and simultaneously pay-ing the contribution required, or by sub-mitting proof of such payment.

Every legal practitioner referred to in s 84(1) must operate a trust account (s 86(1)), which trust account must be kept at a bank with which the Legal Prac-titioners’ Fidelity Fund (the Fund) has made an arrangement as provided for in s 63(1)(g). The legal practitioner must deposit, as soon as possible after receipt thereof, money held by such practice on behalf of any person. A trust account practice may, of its own accord, invest in a separate trust savings account or other interest-bearing account any mon-ey which is not immediately required for any particular purpose (s 86(3)). Additionally, and on the instructions of any person, a trust account practice may open a separate trust savings ac-count or other interest-bearing account for the purpose of investing therein any money deposited in the trust account of that practice, on behalf of such person over which the practice exercises exclu-sive control as trustee, agent or stake-holder or in any other fiduciary capacity (s 86(4)).

In terms of interest accrued on trust bank accounts, trust account legal prac-titioners are obligated to pay over any and all interest generated or accruing on the separate trust savings or other interest-bearing account opened by the trust account legal practitioner in terms of s 86(2) and (3) of the Act to the Fund. Additionally, 5% of the interest gener-ated on an investment account opened on the specific instructions of a client in terms of s 86(4) is payable to the Fund. The balance of this interest must be paid to the client.

Further obligations of trust account legal practitioners include a peremptory duty to immediately report, in writing, to the LPC the occurrence of the total amount in a trust account practice bank account and money held as trust cash being less than the total amount of cred-it balances of the trust creditors shown in its accounting records, together with a written explanation of the reason for the debit and proof of rectification

(r 54.14.10). A trust account practitioner is required to immediately report, in writ-ing, to the LPC should an account of any trust creditor be in debit, together with a written explanation of the reason for the debit and proof of the rectification (r 54.14.11). Equally, and unless pre-vented by law from doing so, every legal practitioner is required to report to the LPC any dishonest or irregular conduct on the part of a trust account legal prac-titioner in relation to the handling of or accounting for trust money on the part of that trust account legal practitioner (r 54.36).

In general, trust account legal practi-tioners are responsible for ensuring that the provisions of the Act and of those rules relating to trust accounts of the firm are complied with (r 54.19).

Compliance with obligations expound-ed in r 54.31 to 54.32 is necessary for trust account legal practitioners ceas-ing to practice or transferring from one practise to another.

ConclusionObligations attached to trust accounts, are the responsibility of each individual trust account legal practitioner, whether they are practising (or deemed to be practising) for their own account – either alone or as a partner, or as a member or director of a juristic entity, or as a s 34(2)(b) advocate. A trust account legal prac-titioner must always be aware of their duty to comply with the requirements of the Act and the rules. Reasonable meas-ures and controls must be implemented by the legal practitioner to ensure com-pliance with such obligations.

Proper compliance with the obliga-tions imposed on trust account legal practitioners enforces professionalism and ethical conduct and achieves proper management of the risk of theft or mis-appropriation of funds or property given to or held in trust by the trust account practice.

q

Rampela Mokoena BProc (University of Zululand) is a curatorship officer at the Legal Practitioners’ Fidelity Fund in Centurion.

FNB057_3PIM_DeRebus_Repro_v1.pdf 1 2019/02/07 11:23

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DE REBUS – MAY 2019

PRACTICE MANAGEMENT – LEGAL PRACTICE

Another six basic universal principles applicable to the

conduct of a candidate legal practitioner

In a previous article ‘Five basic uni-versal principles applicable in the conduct of a candidate attorney’ 2018 (Nov) DR 20, we looked at the first five universally applicable conduct principles. Those princi-ples, and the principles dealt with

in this article, apply regardless of culture and where one works.

In this article we will look at the re-maining six universally applicable con-duct principles.

Principle 6: Be very careful about what you do on social media The lines between your professional life and your private life have, as far as so-cial media is concerned, basically disap-peared.

You should be aware of what you post or say on social media. Being a candidate legal practitioner means that you are working towards becoming a member of the legal profession. This means at least two things:• Firstly, your firm’s clients want to know that their legal affairs are in safe and reliable hands. Always ask yourself whether your social media actions send a different message to your firm’s clients. It may seem great fun to post pictures of your group of friends at a drunken party on Facebook. Doing that will, however, not give your firm’s clients any comfort that their legal affairs are being handled by the right firm. • Secondly, what you do on social media is ultimately a reflection on your firm. People will normally connect the dots be-tween your social media posts and your firm. It will not reflect positively on you or your firm if your social media posts are offensive or in poor taste.

The best approach is to stay away from any social media posts that are, or could be, offensive. As a rule of thumb, you should stay well clear of any crude, political, racist, religiously divisive, in-sulting or sexual posts.

Also, be careful which posts you ‘like’ or ‘share’. The same rules apply there.

It is a good idea to go through all your previous social media posts and delete all posts, likes and shares that are no longer appropriate in your new position

as an employee of a firm of legal practi-tioners.

Principle 7: Maintain absolute legal practitioner/client confidentiality

The identities of all of your firm’s clients are confidential.

All details of your firm’s client’s mat-ters are confidential.

Each and every employee of a law firm (including candidate legal practitioners) is automatically under an obligation to maintain absolute confidentiality in re-spect of the firm’s clients and their mat-ters. There are two main exceptions to this obligation, namely:• Firstly, you can disclose a client’s iden-tity and details of the client’s matter if the client has consented thereto. Law firms are often asked by potential new clients for a list of some of the bigger cli-ents that the firm has acted for. The firm can only disclose those clients’ identities to the potential new client if those cli-ents have consented to it.• Secondly, strictly speaking, you do not have to maintain that confidential-ity to the extent that the information is already lawfully available publicly. For example, if your client is a party to liti-gation proceedings, the documents and information that is publicly available in the court file are no longer confidential. However, clients do not enjoy having their matters discussed in public, even if the details of the matter are lawfully publicly available. The best approach is not to discuss, disclose or comment on a client’s matter unless the client has given you its express consent to do so.

It seems like such an obvious and easy obligation for you to comply with. Where is the problem, you may ask? The prob-lem can, for example, arise because you and your friends from other law firms meet up from time to time and want to exchange notes about your experiences. You are eager to compare notes and to share your experiences. In your eager-ness (but before you realise what you have done) you have told a friend from outside your firm that you do a lot of commercial agreements for client A, B or C. That is a breach of the legal practition-

er/client confidentiality obligation that applies to you as an employee of your firm. Place a guard over your mouth. Al-ways.

Another area where it becomes tempt-ing to breach this obligation is if you are working on a high profile matter. You may want to impress your friends by tell-ing them the inside scoop of ‘what really happened’ or ‘what is really going on’. Do not. It is never worth it.

Principle 8: Be on timeWe all know that first impressions count. The worst first impression you can make (apart from tripping over your feet) is to be late for a meeting, for work or for court proceedings.

Being late is incredibly rude – by be-ing late for a meeting you are basically insulting the other participants. Your conduct tells them that their time is not as valuable as yours and that they must just waste their time until you eventually grace them with your presence.

Do not be late. You start with a mas-sive disadvantage if you arrive late.

However, if for some really justifiable reason (such as a two-hour delay on the highway because of load shedding), you find that you are going to be late, let the host of the meeting know that you will be late and why. When you do arrive, apologise for being late.

Principle 9: Avoid toxic peopleEach day has only 24 hours. A normal working day has (theoretically anyway) only seven and a half hours. Use your time wisely and productively.

One of the biggest thieves of your working hours is ‘toxic people’. Toxic people are people who are almost always negative, who are always complaining and who very rarely manage (or even try) to do anything constructive.

Toxic people literally steal your time and sap your energy.

Judging from some 25 years’ expe-rience and discussions with business people, phrases that a toxic person may typically use include ‘I am so tired’ (said every single day without any underly-ing medical reason), ‘the partners in this firm [followed by some or other negative

By Francois Terblanche

DE REBUS – MAY 2019

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comment]’ and ‘I cannot believe that they [followed by some negative remark]’.

Toxic people will happily eat up your time and your energy. And never give anything back in return.

If you do not give toxic people the op-portunity to unpack their never-ending tales of woe on you, they will just move on and find the next victim who has to endure their lamentations.

Avoid toxic people like the plague, and obviously, do not be a toxic person your-self.

Principle 10: Have goals, not dreamsIt is perfectly normal to speak about your dreams and aspirations when you officially start your legal career.

You have to be rather precise in what is meant by your dreams though.

If your dreams are really just wishes, then they are of no use to you.

If I say that my dream is to become ‘a partner at this firm’ or ‘the senior part-ner of this firm’ or ‘a sole practitioner with my own firm’ or ‘a solicitor practis-ing in the City of London’, then I am just expressing a wish.

I could just as well have said that I wish one day to be ‘a partner at this firm’ or ‘the senior partner of this firm’ or ‘a sole practitioner with my own firm’ or ‘a solicitor practising in the city of London’.

Dreams, or wishes, just tell us the re-sult that we want to achieve. They do not give us any guidance on how we are go-ing to get there.

Goals, on the other hand, do give us that critical guidance. Your goals must be stated in writing. Your goals should also be ‘SMART’. That is, your (written down) goals should be:• Specific: Write down your short term and medium-term goals. Make sure that your goals are specific. For example, ‘by the end of my first year of articles I want to be able to draft pleadings properly’.

• Measurable: Make sure that your goals are measurable. How are you going to measure your pleadings drafting goal? You could say that you have achieved that goal if that brilliant 30-year experi-enced litigation partner in your firm only makes very minor changes to the plead-ings that you have drafted.• Achievable: Make sure that your goals are realistic and are, therefore, achiev-able. Do not be too lenient on the time lines for achieving your goals but be real-istic too. For example, you are probably not going to be a very competent corpo-rate law practitioner after one year of ex-posure to that field – the field is just too complex and varied. Some things take time. But you can set a one-year goal whereby you want to know and be able to apply those sections of the Compa-nies Act 71 of 2008 that typically come up in corporate transactions.• Required: This is a critical element of your goal setting. What is required for you to achieve your goals? This element should record what you have to do in order to achieve your goal. For exam-ple, if we take the Companies Act goal set out above, you could say: ‘I need to read those sections until I know their substance by heart. Then I need to read the commentary on them until I know all their nuances. Then I must practise applying them in each corporate trans-action that I am involved in. Obviously, I must make sure that I am involved in enough corporate transactions’.• Time based: You should have a defi-nite time line for achieving each of your goals. That time line should be realistic but not too lenient. Do not wait until the time line expires before you meas-ure how you are faring in achieving your goals – measure that every now and then and adjust your time lines if necessary. Do not be too hard on yourself, but do not be too lenient either.

Find 30 minutes. Go sit at a peace-

ful place (or any other place that ener-gises you). Write down your goals. Make sure that they are SMART. Then revisit your goals often. Measure how you are doing. Adjust the time lines if needed. And, very importantly, give yourself a massive pat on the back every time you have achieved one of your goals. Be sure to celebrate each and every one of your successes.

Principle 11: Remember your past, live in the present and work towards the futureBeing a candidate legal practitioner is a unique period in any legal practitioner’s life. It is at times bewildering, frustrating and demotivating. It is also exciting, re-warding and a great learning curve.

Do not wish your life away. Do not wish your articles over. Rather, enjoy the experience. Just as with anything else in life, the more effort you put into your articles, the more rewarding the experi-ence will be.

Keep one eye firmly fixed on your fu-ture. Be clear about where you want to get to, and how you are going to do that. Your goals (written down and SMART) will assist you greatly with that.

However, never forget your past. Al-ways remember where you come from. Every now and then, take the time to measure how far you have come already. And pat yourself on the back for it. Then look forward to the future and be clear about how far you still want to progress. Your goals will tell you how you are go-ing to get there.

q

Francois Terblanche BCom Law (cum laude) LLB (cum laude) (UJ) is a legal practitioner at Knowles Husain Lind-say Inc in Johannesburg.

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DE REBUS – MAY 2019

Does the life of a rule nisi automatically extend on

postponement of return date?

PRACTICE NOTE – JuRIsPRudENCE

This article is set to deal with the following –• the status of a rule nisi order after postponement of return date without a court order

dealing with the life of the rule nisi; and• remedies available on expiry or dis-charge of the rule nisi.

A rule nisi is an order granted ex parte directed to a particular person or per-sons calling on them to appear in court on a certain fixed date to show cause why the rule should not be made abso-lute.

In practice it has become a norm and a logical presumption that in the instance where the rule nisi is the subject mat-ter or heart of the proceedings then the postponement of the rule nisi has an au-tomatic effect of extending the life of the rule. This was supported in the case of Crundall Brothers (PVT) Ltd v Lazarus No and Another 1991 (3) SA 812 (ZH), where the court held that postponement of a rule nisi had an automatic effect of ex-tending the life of the rule. This was held on the ground that the relief was pro-vided by the rule nisi and consequently to hold that the rule had lapsed would render the postponement nugatory as there would be no rule to confirm on the postponed return date.

I hold a different view, on the basis that a rule nisi is primarily an interim or-der of the court and it further has no in-dependent existence, but is conditional on confirmation by the court, therefore, the court has no authority to mero motu extend the life of a lapsed order (see MV Snow Delta Serva Ship Ltd v Discount Tonnage Ltd 2000 (4) SA 746 (SCA) ir-respective of whether or not the relief sought is dependent on the existence of the rule nisi.

This means that on the return date, when the matter is postponed and there is no order of court dealing with the life of the rule nisi, the rule then lapses and consequently the umbrella of protection afforded to the applicant by the rule falls away, leading to the discharge of the duty of compliance on the respondent or defendant post expiry of the rule.

In National Director of Public Prosecu-tions v Walsh and Others 2009 (1) SACR

603 (T) the court provided that, a rule nisi order is an unusual indulgence to the applicant, as it permits the applicant to exceptionally condemn the unheard respondent in their absence. Such prac-tice goes against the general grain of fairness in the judicial process and it is for this reason that orders of this nature should be strictly temporary and for a fixed limited duration.

Therefore, it is solely the duty of the applicant when postponing a return day for a matter incorporating a rule nisi or-der to bring to the attention of the court the existence of the rule to enable the court to extend the rule to a specific date and the date to which the matter stands postponed, otherwise the rule simply lapses.

Remedies available to the applicant on expiry or dis-charge of the rule nisiA rule nisi is discharged by failure of ap-pearance by an applicant on the return date. Rule nisi is also discharged on ex-piry of its fixed period.

Where the rule nisi is discharged by prescription or effluxion of time, the applicant may on expiry of the rule nisi bring an application in terms of r 27(1) and (2) of the Uniform Rules of the Court, which reads:‘(1) In the absence of agreement between the parties, the court may upon applica-tion on notice and on good cause shown, make an order extending or abridging any time prescribed by these rules or by an order of court or fixed by an order extending or abridging any time for do-ing any act or taking any steps in con-nection with any proceedings of any na-ture whatsoever upon such terms as to it seems fit.(2) Any such extension may be ordered although the application, therefore, is not made until after expiry of the time prescribed or fixed, and the court order-ing any such extension may make such order as to it seem fit … .’

The applicant may only bring an appli-cation in terms of the above intimated in circumstances where the rule has ex-pired, this remedy may be used in in-

stances where the applicant postpones the return date and omits to deal with the life of the rule on postponement.

In the case of Fisher v Fisher 1965 (4) SA 644 (W) the court had to deal with an issue where the applicant failed to ap-pear on return date and in the circum-stances the court held that it did not have the power to revive a rule nisi, which had lapsed because the applicant had failed to take steps within the time limit laid in the rule and the court then decided that where the applicant defaults by failing to appear on return date then the rule nisi is discharged and the matter struck from the roll.

It is the above decision that inspired the amendment of r 27 and birthed r 27(4) which reads:‘(4) After a rule nisi has been discharged by default of appearance by the appli-cant, the court or a judge may revive the rule and direct that the rule so revived need not be served again.’

Therefore, where the rule is dis-charged by default of appearance of the applicant on return date, the applicant may bring an application in terms of r 27(4) referred to above to revive the life of the discharged rule.

In conclusion, it is crucial for litigants to know the distinction between r 27(1), 27(2) and 27(4) of the Uniform Rules of the Court applications and the different circumstances to which the remedies in-timated above are available. The above seeks to protect the applicant in rule nisi applications. Further, applicants as dom-inus litis are in applications of this nature entrusted with a duty to take reasonable steps to ensure that the court makes an order as to the life of the rule nisi on the return date and to ensure that a rule nisi order does not continue beyond the date without a court order.

q

sinazo Ntshangase LLB (Fort Hare) is a legal practitioner at Mamyeni Mazi-buko Attorneys in Centurion. Ms Ntshangase writes in her personal capacity.

By sinazo Ntshangase

DE REBUS – MAY 2019

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Clearing up the confusion on evictions

By Mohammed Moolla

PRACTICE NOTE – PROPERTy LAw

There has recently been tur-moil and confusion on how to proceed with eviction applica-tions in respect of residential properties.

The judgment of McNeil and Another v Aspeling and Others (WCC) (unreported case no A85/18, 28-6-2018) (Davis AJ) handed down by the Western Cape Divi-sion of the High Court on 28 June 2018, the eviction procedure to be followed by the magistrate’s court in terms of the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 (PIE) was confirmed.

Following the amendment of r 55 of the Magistrates’ Court Rules, the ap-plication procedure in the magistrate’s court is in all material respects identical to that in the High Court. Rule 55(1) now provides that every application shall be brought by notice of motion supported by an affidavit and addressed to the party or parties against whom relief is claimed and to the registrar or clerk of the court. The notice of motion must be

in a form, similar to Form 1A, which is equivalent of the long form notice of mo-tion used in the High Court. The notice of motion must set a day not less than five days after service on the respondent by which notice of opposition is required to be given and must stipulate a day on which the application will be heard in the absence of any notice of opposition.

Except in the case of urgent applica-tions – where a different procedure may be adopted on proper motivation – ser-vice of the (long form) notice of motion and founding affidavit in terms of s 4(3) of PIE should ordinarily precede the ex parte application to court for authorisa-tion and directions in regard to service of a s 4(2) notice, which will then be served subsequently at a stage when the hearing date has been determined. Thus, service will be effected twice, initially when the notice of motion and affidavit is served in accordance with the rules, and subse-quently when the s 4(2) notice is served, which contains the hearing date.

The grounds for the proposed eviction

must also be set out in the s 4(2) notice. The mere stating that the grounds are set out in the affidavit attached does not constitute proper compliance with s 4(5)(c) of PIE. The grounds of the proposed eviction need to be expressly stated in the s 4(2) notice for the notice to be ef-fective. ‘The recipient should not be left to trawl through an affidavit in order to try and ascertain what grounds are relied on for eviction.’

Section 4(1) to (5) of PIE lays down peremptory requirements for obtain-ing of an eviction order. In terms of the s 4(1) proceedings may only be institut-ed by the owner of the property. In terms of s 4(2) at least 14 days before the date of the hearing, effective notice must be given in writing to the unlawful occupier and municipality having jurisdiction. In terms of s 4(3) the procedure for serving and filing papers is as prescribed by the rules of court. In terms of s 4(4) the court has to be satisfied that service cannot be conveniently or expeditiously effected to grant service in another manner. In

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DE REBUS – MAY 2019

terms of s 4(5) the notice of proceedings as contemplated in subs (2) must –

‘(a) state that proceedings are being instituted in terms of subsection 4(1) for an order for the eviction of the unlawful occupier;

(b) indicate on what date and at what time the court will hear the proceedings;

(c) set out the grounds for the pro-posed eviction; and

(d) state that the unlawful occupier is entitled to appear before the court and defend the case and where necessary, has the right to apply for legal aid.’

In the case of Cape Killarney Property Investments (Pty) Ltd v Mahamba and Others 2001 (4) SA 1222 (SCA) the court interpreted s 4 of PIE and set out the cor-rect procedure to be followed in eviction applications.

First, it was held that the notice of eviction proceedings contemplated in s 4(2) of PIE must be authorised by an order of court in addition to the notice of proceedings in terms of the rules of court as contemplated in s 4(3) of PIE, namely the notice of motion.

Secondly, it was held that since the date of hearing of an application in the High Court is usually only determined after all the papers have been served, and seeing that the s 4(2) notice must in-dicate the date on which the application will be heard, that has the consequence that an application for authorisation to serve a s 4(2) notice can only be made af-ter all the papers have been filed, that is after the notice of motion and affidavits have been served in accordance with the rules of court as contemplated in s 4(3).

The fundamental principle laid down in the Cape Killarney case was that the notice in terms of s 4(2) of PIE must in-form the recipient of the date on which the eviction proceedings will be heard.

The step-by-step procedure is as fol-lows:• Every application in terms of PIE is brought in terms of r 55 of the Magis-trates’ Court Rules. It is brought on no-tice of motion supported by an affidavit as to the facts on which the applicant relies on relief. In terms of the notice the respondent is given five days to oppose

the application. The respondent is also requested – if they wish to oppose the matter – to appoint an address where there are three or more attorneys prac-tising independently of one another within 15 km of the clerk of the court. • Once the application papers are signed, the clerk of the court is approached to is-sue a case number and supply a date for when the main application will be heard. When requesting the date, the applicant must take into account how long it will take the Sheriff to serve this document, as well as the procedural rule of s 4(2) of PIE, which requires at least 14 days be-fore the date of the hearing.• The application papers are then taken to the Sheriff for service.• On receipt of the return of service, the applicant drafts the application in terms of s 4(2). The grounds for the proposed eviction must be set out briefly in the s 4(2) notice. As stated earlier, the mere stating that they are fully set out in the supporting affidavit does not constitute proper compliance with s 4(5) of PIE. The grounds need to be effectively stated in the s 4(2) notice.• Once the application has been signed, the applicant approaches the magistrate at court with the ex parte papers, includ-ing proof of service by the Sheriff. The court will then be requested to consider the contents of the notice and suggested manner of service and to endorse its ap-proval or disapproval thereof of the ap-plication.• Once the ex parte application is grant-ed, the s 4(2) notice may be served on the respondents and the municipality having jurisdiction.• The service must take place in accord-ance with the directions of the court and at least 14 days before the hearing takes place. The 14-day period refers to ordi-nary days and not court days.• On the return date the court will hear evidence as to the equity provisions as set out in s 4(6) with regard to elderly persons, and households headed by women and/or children.• The court must then, in the light of all the facts placed before it, make an or-der as to what is just and equitable to

grant an order for eviction considering the provisions of subss 4(6), 4(7), 4(8) and 4(9) of PIE.• Frequently, applicants are faced with the difficulty of effecting service. In that case the applicant will have to bring an application in terms of r 10(1)(b) read with r 55(4)(b). Rule 10(1)(b) provides that:

‘If service of process or document whereby proceedings are instituted can-not be effected in any manner prescribed in rule 9 … the person desiring to ob-tain leave to effect service may apply for such leave to a presiding officer, who may consider such application in cham-bers.’

The person desiring to obtain leave in the circumstances contemplated in r 10(1)(b) shall make an application to court setting forth concisely the nature and extent of their claim, the grounds on which it is based, on which the court has jurisdiction to entertain the claim, and also the manner of service which the court is asked to authorise. If the appli-cant is requesting for service other than personal service, the applicant should also set forth the last known wherea-bouts of the person and the inquiries made to ascertain their whereabouts. The court may make an order as to the manner of service it deems fit and shall further order time within which the no-tice of intention to defend is given or any other step is to be taken by the person to be served.

Rule 55(4)(b) makes provision for ‘[a]pplications to the court for authority to institute proceedings or directions as to procedure or service of documents [which] may be made ex parte where the giving of a notice of such application is not appropriate or not necessary.’

q

Mohammed Moolla BProc (UKZN) is a senior magistrate at the wynberg Magistrate’s Court in Cape Town.

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PRACTICE NOTE – PROPERTy LAw

DE REBUS – MAY 2019

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Step ahead carefully – the uncertainty of unfair contracts continues

In the case of Botha and Another v Rich NO and Others 2014 (4) SA 124 (CC) the Constitutional Court (CC) held that the exercise of a right of cancellation in a contract of purchase in instalments of immovable prop-erty was unenforceable on the ground that to enforce it would be ‘unfair’ in the circumstances because of its

disproportionately adverse consequences for the purchaser.

FactsGB Bradfield (ed) in Christie’s Law of Contract in South Africa 7ed (Cape Town: Juta 2016) at p 22 summarises the case as follows: The purchaser ‘after having paid more than half the instalments due under the contract, but before exercising the statutory right in terms of [s 27 of] the Alienation of Land Act [68 of 1981] to have the property transferred into her name against registra-tion of a mortgage bond over the property for the balance of the purchase price, the [purchaser] defaulted in the payment of instalments, municipal rates, taxes and service charges for which she was liable under the agreement. The seller exercised its contractual right to cancel the contract. The contract contained a forfeiture clause in terms of which the instalments already paid were forfeited to the seller. The purchaser, despite having made no further payments, then invoked her statutory right to claim transfer of the property into her name, against registration of a mort-gage bond over the property for the balance of the pur-chase price. No reference was made to how the arrears were to be dealt with. The seller responded some time after the demand for transfer with a demand for pay-ment of the arrears still due. The purchaser did not respond to this and the seller notified her of its inten-tion to cancel the contract. The purchaser responded tendering the arrears against transfer of the property. The seller did not respond to this and instituted pro-ceedings to have the sale cancelled and the purchaser evicted. The application was opposed by the purchas-er who counterclaimed for an order compelling trans-fer of the property into her name. The seller argued that the contract had been validly cancelled and, alter-natively, that, in the event that the cancellation clause was found to be unenforceable, they were entitled to withhold transfer of the property until the purchaser had paid the arrears due.’

Picture source: Gallo Images/Getty

By Igor Szopinski

FEATURE – CONTRACT LAW

DE REBUS – MAY 2019

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JudgmentIn reaching its decision that the enforce-ment of the contracting right to cancel-lation would be ‘unfair’ in the circum-stances, the court relied on a somewhat ‘free-floating’ notion of fairness (see D Bhana and A Meerkotter ‘The Impact of the Constitution on the Common Law of Contract: Botha v Rich NO (CC)’ (2015) 1323 SALJ 494).

The court held: ‘In my view, to deprive Ms Botha of the opportunity to have the property transferred to her under s 27(1) and in the process cure her breach in regard to the arrears, would be a disproportionate sanction in rela-tion to the considerable proportion of the purchase price she has already paid, and would thus be unfair. The other side of the coin is, however, that it would be equally disproportionate to allow reg-istration of transfer, without making that registration conditional upon pay-ment of the arrears and the outstanding amounts levied in municipal rates, taxes and service fees.’

Regarding the cancellation of the agreement the court held as follows:

‘[G]ranting cancellation – and, there-fore, in this case forfeiture – in circum-stances where three-quarters of the pur-chase price has already been paid would be disproportionate penalty for the breach. In their application for cancel-lation the trustees did not properly ad-dress the disproportionate burden their claim for relief would have on Ms Botha. They took the view that the question of forfeiture and restitution was independ-ent of, and logically anterior [sic] to, the question of cancellation. That was a fun-damental error. The fairness of award-ing cancellation is self-evidently linked to the consequences of doing so. The trustees’ stance, therefore, meant that they could not justify this court’s award-ing the relief they sought. In view of the above the cancellation application must fail.’

IssueBradfield (op cit) at p 23, thereafter cor-rectly points out that: ‘This decision creates uncertainty with regard to the exercise of a contractual right to right to cancellation ... on the basis that the effect of cancellation will be dispropor-tionately harsh in light of their breach.’

However, the inquiry into this mat-ter cannot end here. It is necessary to examine whether the CC’s judgment is correct in the first place and whether the underlying reasoning of the court is ac-ceptable to justify the outcome.

Prior to 1962 as it is now, it is not uncommon for contracting parties to

include a term in their contract bind-ing the one party to pay a fixed sum of money or return the property and forfeit all instalments already paid in the event of committing a specified breach of the contract. Parliament in order to combat improper ‘unfair’ or ‘excessive’ penalties or forfeiture clauses intervened and as a result the Conventional Penalties Act 15 of 1962 (the Act) was passed.

Snyman J in Van Staden v Central South African Lands and Mines [1969] 1 All SA 44 (W) at 351 summarised the object of the Act as follows:

‘This Act may be said mainly to aim at two things –

(1) to make it plain beyond doubt that a penalty stipulation arising out of the contractual obligation is enforceable at law; and

(2) to prevent the exaction of unfair or excessive penalties being stipulated for in contracts, and in this respect also to prevent both a penalty and damages be-ing claimed in respect of the same act or omission on the part of the debtor.’

The CC in its judgment refers to the seller as making a fundamental error by treating forfeiture and cancellation of the contract independently. Interesting-ly enough, based on the Act, the seller had the right to enforce the forfeiture by law in the event of a breach, so there was no obligation for the seller to justify the consequences of cancellation, as forfei-ture is not reliant on cancellation but on breach of the agreement (see s 1). The CC should have granted the order of can-cellation based on breach instead of not agreeing to the cancellation, because it is prejudicial to the money already paid by the purchaser. The law was not followed accordingly, as regard to whether there is cancellation or there is no cancellation of the agreement, under s 1 the seller was still entitled to forfeiture.

Now we come to the most important section in this article. I urge legal practi-tioners to consider the following:

The starting point for any case – where there is legislation involved – is the case of Minister of Health and Another NO v New Clicks South Africa (Pty) Ltd and Others (Treatment Action Campaign and Another as Amici Curiae) 2006 (2) SA 311 (CC) at para 437 where Ngcobo J explained that it is impermissible to rely directly on constitutional provisions when particular legislation has been enacted to give effect to the Consti-tution, as this would amount to by-passing the relevant legislation. In the Botha case this is exactly what happened. The CC relied directly on the Constitution applying a method of what the judges themselves think is fair thereby bypassing legislation enact-

ed particularly to deal with unfair penal-ties or forfeiture clauses. The court was required to follow the Act.

In Potgieter and Another v Potgieter NO and Others 2012 (1) SA 637 (SCA) the Supreme Court of Appeal (SCA) in response to a decision of the CC in Barkhuizen v Napier 2007 (5) SA 323 (CC) – which decision was based on the CC’s notion of what is unreasonable and unfair in the area of contract law – stated that this notion is fundamentally unsound and it did not reflect the prin-ciples of our law of contract. The court further held: ‘Reasonableness and fair-ness are not freestanding requirements for the exercise of a contractual right’. Brand JA held that unless and until the CC holds otherwise, the law must be tak-en to be as stated by the SCA, and the judge concluded that the High Court had been obliged to follow the common law, and that its decision to do otherwise had violated the principle of legality. Brand JA further added that the reason why the law should not give judges the freedom to decide cases according to what they regard as reasonable and fair is essen-tially that this would give rise to intoler-able legal uncertainty.

In Burger v Central South African Rail-ways 1903 TS 571 at 576, Innes CJ said that ‘our law does not recognise the right of a court to release a contracting party from the consequences of an agreement duly entered into by him merely because that agreement appears to be unreason-able’.

In Bredenkamp and Others v Stand-ard Bank of SA Ltd [2010] 4 All SA 113

DE REBUS – MAY 2019

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(SCA), Harms DP stated that the notions of ‘fairness, justice and reasonableness’ should not extend beyond instances of public policy as well as ‘[m]aking rules of law discretionary or subject to value judgments may be destructive of the rule of law’. This article is an illustration that Harms’ view is correct.

The Botha case seems to indicate that enforcement of contractual obligations now relies on a particular judge’s view of what is fair rather than the terms of con-tract especially when we compare it to the Barkhuizen case. Thus there are two completely different notions on what is ‘fair’.

In reaching its decision that the enforcement of the

contracting right to can-cellation would be ‘unfair’ in the circumstances, the

court relied on a somewhat ‘free-floating’ notion of

fairness (see D Bhana and A Meerkotter ‘The Impact of the Constitution on the Common Law of Contract:

Botha v Rich NO (CC)’ (2015) 1323 SALJ 494).

It is a general rule that courts are as-sumed to know the law and take judicial notice of statutes. The Botha case clearly illustrates that this is not always the po-sition. I urge legal practitioners in future to take notice of Raad vir Kuratore vir Warmbad Plase v Bester 1954 (3) SA 71 (T). The existence of statute need not be pleaded but it is helpful. I am referring to this case in that the existence of the Act was never considered.

In Sasfin (Pty) Ltd v Beukes [1989] 1 All SA 347 (A) Smalberger JA warned that ‘[o]ne [referring to a judge] must be care-ful not to conclude that a contract is con-trary to public policy merely because its terms (or some of them) offend one’s in-dividual sense of propriety and fairness’. The Botha case does exactly the opposite and the CC applied its own individual sense of propriety and fairness without taking legislation into account.

Section 8(3)(a) in the Bill of Rights re-quires the court to develop the common law to the extent that legislation does not give effect to that right. This begs the question: How is it possible for the CC to develop the common law while ignoring and acting contrary to the Act, whose sole purpose it is to address ‘un-fairness’ of forfeiture clauses?

In the Botha case the CC placed the burden of proof on the seller in that the seller must show that the cancellation is fair taking account of the buyer’s conse-quence of doing so, namely, the forfei-ture. Meanwhile, the law is clear that the full legal onus of proving that the pen-

alty is out of proportion to the prejudice suffered by the seller in terms of the Act is on the buyer (see Steinberg v Lazard 2006 (5) SA 42 (SCA)).

ConclusionWhat the CC has done is to provide deci-sions based on a particular judge’s view on what is fair, without considering the terms of a contract, relevant legislation or the law of contract itself. The court did not even compare the possible out-comes of these type of cases when deter-mined via the ‘rule of law’ as compared to its personal notions of what is fair. The decision in the Botha case is simply incorrect as the court was obliged to fol-low the Act and at the very least comply with its provisions, unless there was a direct constitutional challenge to its pro-visions, and the Act was found to be un-constitutional. Instead the final outcome of the case leads to intolerable legal un-certainty, which has further opened the doors to defaulting parties to resist con-tractual rights of the other party, on the notion of fairness. The result and out-come in this case, is therefore, destruc-tive to the rule of law.

The CC needs to ask itself the ques-tion: Quo vadis?

Igor Szopinski LLB Cert Adv Inter Trade Law (Wits) is a legal practitio-ner in Johannesburg. Mr Szopinski writes in his personal capacity. q

FEATURE – CONTRACT LAW

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By Bayethe Maswazi

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Before the Constitutional Court (CC) decision in Chir-wa v Transnet Limited and Others 2008 (3) BCLR 251 (CC) it was easy to determine whether the High Court in a

given labour matter has jurisdiction or not. This is because the CC decision in Fredericks and Others v MEC for Edu-cation and Training, Eastern Cape and Others 2002 (2) SA 693 (CC) clarified the issue. The fine principle in the Freder-icks case, which is underpinned by a lu-cid analysis of the Labour Relations Act 66 of 1995 (the LRA), was understand-ably, confirmed by the Supreme Court of Appeal (SCA) in Fedlife Assurance Ltd v Wolfaardt 2002 (1) SA 49 (SCA). Both decisions agree that the High Court has concurrent jurisdiction with the Labour Court (LC) in matters, which are dealt with in s 157(2) of the LRA. Moreover, both decisions accept that s 157(1) does not deal with all labour matters, instead the High Court loses jurisdiction on the strength of s 157(1) of the LRA and the LRA specifically assigns the jurisdic-

tion in respect of such a matter to the LC. Ironically, this principle seems to have been accepted in the Chirwa case, how the CC then proceeded to find that the Chirwa case was a matter where the jurisdiction of the High Court is ousted, remains one of the ironies of the case.

One would have thought that the prin-ciple in the Fredericks and Fedlife judg-ments delivered from two of South Af-rica’s most superior courts would settle any controversy that may have existed regarding the jurisdiction of the High Court in labour matters. However, it was not to be and to this day, the sorry legacy of the Chirwa judgment follows our ju-risprudence.

In this article I examine the contro-versies relating to the jurisdiction of the High Court in labour matters, which have had many practitioners being careful – sometimes too careful – not to take mat-ters concerning labour disputes before the High Court.

I do this by examining various con-cepts, which are important in the deter-mination of the issue, and the problem

precipitated by the misunderstanding of these concepts, particularly in rela-tion to the Chirwa and Gcaba v Minister for Safety and Security and Others 2010 (1) SA 238 (CC) cases. Later, with the as-sistance of the Constitution, I shall put the Fredericks, Chirwa and Gcaba cases in their proper context to illustrate that the Fredericks judgment remains good law while the Chirwa case seems to have been decided on its peculiar facts, which to some extent, were not properly inter-preted. With regard to the Gcaba case, I will simply say that it is safe to assert that jurisdiction must be understood from the pleadings themselves, which is generally accepted, it adds nothing to the debate, but it will be necessary for me to support this contention and I will do so. But first, the concepts.

Jurisdiction Jurisdiction as a legal concept refers to the power of a court to adjudicate a particular matter definitively, meaning by being able to decide the competing rights of the parties in that given matter,

The High Court still has jurisdiction in

labour matters

DE REBUS – MAY 2019

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FEATURE – lABoUR lAw

as opposed to merely inquiring on the is-sue of jurisdiction. What this means is that where a court decides a matter on its merits, by implication, it accepts that it has jurisdiction to hear the matter, otherwise a court with no jurisdiction has no entitlement to decide the merits of the matter.

Jurisdiction may arise in various guis-es, sometimes a cause of action will de-termine it, while in other instances, the territory where the cause of action arose, will be the guiding consideration. How-ever, in this article, I am only concerned with jurisdiction as it pertains to the cause of action.

Because of the manner in which vari-ous courts have approached this issue, it is necessary that the above point is made, if only for taking the issues back to basics.

In the premises, therefore, a court that does not have jurisdiction does not have the power to decide the merits of the matter. This is important, for as I will illustrate – when dealing with the three cases mentioned – this salutary principle has not always been observed.

An example is apposite. If there was a court that deals exclusively with con-tractual disputes, a party who claims to be a victim of a breach of contract would be entitled to bring that dispute to such a court. In turn that court would exercise jurisdiction over that matter, this it will do purely on the basis that it is a con-tractual dispute based on the plaintiff’s pleaded case. The question then arises whether this change if the defendant pleads that there was never a contract between the parties and, therefore, the court does not have jurisdiction?

This notional plea, at least at first glance seems reasonable, since if there was no contract, surely there cannot be a contractual dispute and in consequence, the court lacks jurisdiction.

But if we restate the principles set out above, namely, that a court that does not have jurisdiction has no business in the merits of the matter and that jurisdic-tion is determined by the form of the pleadings, and not substance of the case, the inelegance in the defendant’s plea becomes glaring. To illustrate further, if there was no contract, the plaintiff does not have a cause of action, but the court does have jurisdiction, hence a finding that there was no contract between the parties. Otherwise, a court which does not have jurisdiction would have to de-cide the merits of the matter and thus offend quite egregiously, the very bed-rock on which jurisdiction as a legal con-cept rests. It is not available then to the court, which does not have jurisdiction to inquire into the existence or otherwise of the contract between the parties, it is sufficient that the applicant has framed their pleadings to show that their case is one of contractual dispute. Whether

this is true or not is not for the court, which does not have jurisdiction. It is for a court exercising its jurisdiction.

The doctrine of precedent To restate the obvious, the doctrine of precedent holds that a court of lower status is bound by its own decisions and of those of the courts higher or superior to it. This principle seems uncontrover-sial, and in practice it often is. This for two reasons –• first, not everything said by a court of higher status is binding on a lower court, but only the reasoning underpinning what the court pronounces in response to the issue put before it, is; and• secondly, it is possible for the lower court to distinguish the reasoning of the higher court from the issue it must de-cide and thus hold itself free from the clutches of the doctrine of precedent in relation to the issue.

It is also possible for a lower court to conclude that what was said in a given case by the higher court, which at face value, seems binding, was not the rea-soning underpinning the conclusion which the latter was required to decide, in other words, it had no precedential value.

All of this, in summary, means that in order to decide whether what the high-er court held constitutes precedent, we must understand what the issue is that court had to decide on. In that case, we will find it easy to identify the reasoning that underpinned its answer to the ques-tion it was required to answer, in other words, its ratio decidendi. This is neces-sary to clarify since many times, the sig-nificance is often overlooked. This pas-sage will be significant later.

The Constitution Since the High Court derives its jurisdic-tion from the Constitution, we must look at the Constitution in order to answer the question of whether the jurisdiction of the High Court in labour matters is ousted as a matter of general principle. This is so because any statute that pur-ports to deprive the High Court of ju-risdiction, must do so consonant to the Constitution. Section 169 of the Consti-tution gives the High Court jurisdiction to decide constitutional matters, except where such matters are –• within the exclusive jurisdiction of the CC; or • are assigned to another court equiva-lent to the High Court.

In the same section we glean that the High Court has jurisdiction in respect of any other matter except a matter, which has been assigned to another court, ir-respective of the status of such a court.

Therefore, just on the elementary reading of s 169 of the Constitution, it is not possible for the High Court to lose jurisdiction to any forum that is not a

court of law, including the Commission for Conciliation, Mediation and Arbitra-tion (CCMA) on the basis of the above constitutional framework.

The Fredericks caseThis case concerned a refusal of the Department of Education, Eastern Cape to approve severance packages in re-spect of certain of its employees. Con-sequently, these employees approached the High Court seeking review of the re-fusal and other consequential relief. The High Court, per White J refused to hear them on the basis that their claim was a labour matter and thus the High Court lacked jurisdiction. The CC, on appeal, took a different view reasoning that the High Court has concurrent jurisdiction with the LC in respect of the dispute. Of importance to the decision in this mat-ter is that the CC arrived at its decision anchored by s 169 of the Constitution, and held that since the CCMA is not a court in terms of s 169, the High Court’s jurisdiction is only ousted where the matter is assigned to the LC in terms of s 157(1). This decision was distinguished in the Chirwa case and was not over-ruled, which means it is still good law. Decisions of the various High Courts to the effect that the Chirwa case must be understood to have overruled the Fred-ericks case have been unpersuasive in their reasoning in this regard.

The Chirwa caseThis matter concerned a dismissal of an employee for incapacity. She referred the matter to the CCMA whose proceed-ings she abandoned midstream and ap-proached the High Court for a review of the decision arguing that it constitutes administrative action in terms of the Pro-motion of Administrative Justice Act 3 of 2000 (PAJA) since the decision violat-ed the Code of Good Practice contained in sch 8 of the LRA. The High Court non-suited her, reasoning that her dispute was a labour matter and thus the High Court lacked jurisdiction. Her appeal to the SCA was met with the same fate al-beit by a narrow majority. Similarly, the CC did likewise. The majority decision of the CC distinguished the Chirwa case from the Fredericks case, reasoning that she relied on the LC, while the Fredericks case did not. There is a lot to be said about the tenuous reasoning of the CC in the Chirwa case for distinguishing the Fredericks case, since reference to the Labour Code was only resorted to only for the purpose of establishing that the dismissal contravened a statute in terms of PAJA and not to anchor the entire ap-plication in the LRA. In any event, in the absence of any general principle that ousts the jurisdiction of the High Court in labour matters in the LRA, the conclu-sion in the Chirwa case, while clear on the facts, seems rather opaque in prin-

DE REBUS – MAY 2019

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Bayethe Maswazi BProc LLB (Fort Hare) is a legal practitioner at Mba-bane & Sokutu Inc in East london.

q

ciple, which is why one must be hesitant to hail the Chirwa case as establishing a new principle regarding the subject of the jurisdiction of the High Court in la-bour matters.

The Gcaba caseMr Gcaba applied for the position of the Station Commander, which he did not get as someone else was appointed. Ag-grieved by this he challenged the failure to appoint him to the position, by way of review at the High Court, contending that the decision not to appoint him con-stituted administrative action in terms of PAJA. His case was one of review of an administrative action. The High Court for its part held that in the light of the Chirwa case, the High Court does not have jurisdiction since it was a labour matter. On appeal to the CC, the result did not change for a very interesting reason. The CC, after making the point about the doctrine of precedent and its importance for the rule of law, framed the issue before it as being whether the failure to appoint Mr Gcaba constituted administrative action contemplated in

PAJA. The court then proceeded to an-swer this question in the negative. This means that the court said the dismissal did not constitute administrative action.

Unless I have missed something, it ap-pears to me that this conclusion put paid to any issue before court, since it meant that Mr Gcaba had failed to make a case for the relief he sought. My analogy of a contractual dispute above regarding a court meant only for contractual dis-putes finds its practical application. An-ything else that the court said including its interpretation of ss 157(1) and 157(2) of the LRA was said as by the way or what is called obiter dictum. This is the reason, in my view, why the Gcaba case made no contribution to the debate regarding the jurisdiction of the High Court in labour matters at all.

ConclusionThe jurisdiction of the High Court in all matters is no longer a matter of common law, s 169 of the Constitution clearly takes that responsibility. As the supreme law, the Constitution is unable to run parallel to the common law on any issue.

FEATURE – lABoUR lAw

If the Constitution tells us that the High Court has jurisdiction in all matters, ex-cept when such jurisdiction is assigned to another court in terms of legislation, we must wait for such legislation before we take away constitutionally awarded authority from the High Court. Section 157(1) does not take away the jurisdic-tion of the High Court in labour matters. Instead, the section tells us of the gen-eral approach applicable when assigning the jurisdiction to the LC. This approach can be expressed simply as meaning that where the LRA says a particular dispute is assigned to the LC, the latter has ex-clusive jurisdiction only in respect of that particular matter, surely not all la-bour matters. This is the best meaning of s 157(1). Both the Fredericks and Chirwa cases accepted this meaning.

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THE LAW REPORTSMarch 2019 (2) South African Law Reports (pp 1 – 328);

[2019] 1 All South African Law Reports February (pp 291 – 584); [2019] All South African Law Reports April (pp 1 – 305); 2019 (1) Butterworths Constitutional Law Reports – January (pp 1 – 163)

Heinrich Schulze BLC LLB (UP) LLD (Unisa) is a

professor of law at Unisa.

This column discusses judgments as and when they are published in the South African Law Reports, the All South African Law Reports and the South African Criminal Law Re-ports. Readers should note that some reported judgments may have been overruled or overturned on appeal or have an appeal pending against them: Readers should not rely on a judgment discussed here without checking on that possibility – Editor.

LAW REPORTS

Abbreviations

CC: Constitutional CourtECP: Eastern Cape Local Divi-sion, Port ElizabethGJ: Gauteng Local Division, Jo-hannesburgGP: Gauteng Division, PretoriaKZD: KwaZulu-Natal Local Di-vision, DurbanSCA: Supreme Court of Ap-pealWCC: Western Cape Division, Cape Town

Civil procedureConflicting versions of ex-pert evidence – balance of probabilities: In Batohi v Roux [2019] 1 All SA 390 (KZD) the defendant was a practising neurosurgeon in private prac-tice and the plaintiff was his patient. During 2004, the de-fendant successfully operat-ed on the plaintiff to alleviate a nerve-related problem. The plaintiff was almost immedi-ately, rendered pain-free. In 2011 the pain recurred. The defendant performed a revi-sion operation. This time, the procedure was less success-ful. The plaintiff sustained permanent and irreversible nerve damage.

The plaintiff sought dam-ages from the defendant in delict on the ground that the latter was negligent in that he failed to allow for a suf-ficiently meaningful period of conservative treatment before advising the plaintiff to undergo the surgery in question. The plaintiff also averred that he was not suf-ficiently informed of the risks attached to the surgical pro-cedure.

Vahed J held that the mate-

rial issues for determination were as follows:• First, whether the defendant was negligent in not treating the plaintiff conservatively in the first instance and before resorting to surgery. • Secondly, whether the de-fendant failed in his duty to obtain the plaintiff’s in-formed consent to the sur-gery. • Thirdly, whether any such negligence on the defendant’s part contributed to, or was a cause of, any damages which the plaintiff might prove he has suffered (causation).

The plaintiff bore the onus of proof on all the issues.

The two versions placed be-fore the court were conflict-ing and irreconcilable. The test, in such circumstances, is that the plaintiff can only suc-ceed if he satisfies the court on a preponderance of prob-abilities that his version is true and accurate and, there-fore, acceptable. The plaintiff must further prove that the other version advanced by the defendant is, therefore, false or mistaken and falls to be rejected. In deciding whether that evidence is true or not, the court will weigh up and test the plaintiff’s allegations against the general probabili-ties.

Both expert medical wit-nesses shared the view that, in the circumstances of this case, it was not unreasonable for the defendant to have rec-ommended surgery without further conservative treat-ment. Even if it could be es-tablished that the defendant was negligent in not treating the plaintiff conservatively before resorting to surgery,

the plaintiff had not succeed-ed in establishing that further conservative treatment would have resulted in a recovery. The plaintiff had thus not dis-charged the onus of proving causal negligence on the part of the defendant.

The court accordingly found in favour of the defendant.

Competition lawUnlawful use of confidential information and trade se-crets: In Pexmart CC and Oth-ers v H Mocke Construction (Pty) Ltd and Another [2019] 1 All SA 335 (SCA) the first respondent (Mocke Construc-tion) was a pipeline construc-tion company that specialised in lining steel pipes used in the mining industry with a plastic high density polyeth-ylene liner. Before the mate-rial events that gave rise to

the present litigation, both the second respondent, Mr Mocke, and the third appel-lant, Henn, had developed ex-perience in the plastic lining of steel pipes.

In furtherance of his ambi-tion to revolutionise the pipe-lining industry by rehabilitat-ing old pipes through placing a plastic liner inside the steel pipe, Mr Mocke began discus-sions with one Gish, an Amer-ican, who sold Mr Mocke the exclusive and irrevocable li-cence to the process needed for plastic-lining steel pipes. In turn, Mr Mocke, with Gish’s consent, permitted Mocke Construction use of the intel-lectual property rights that flowed from the licence.

In 2011, Henn was em-ployed by Mocke Construc-tion. During his employment with Mocke Construction, he became involved in the plas-

DE REBUS – MAY 2019

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tic-lining process, but as revo-lutionised by Mr Mocke.

In 2013, Henn’s services with Mocke Construction were terminated and, he almost immediately thereafter, took up employment with the first appellant (Pexmart). Mocke Construction contended that Pexmart and Henn then be-came their competitors in the pipe-lining industry through the alleged unlawful actions of Henn. It alleged that the appel-lants had unlawfully made use of their confidential informa-tion and trade secrets.

Navsa ADP pointed out that the principles on which liabil-ity for unlawful competition rests are that every person is entitled to carry on their trade or business in compe-tition with their rivals. But the competition must remain within lawful bounds. If it is carried on unlawfully, in the sense that it involves a wrong-ful interference with another’s rights as a trader that con-stitutes an injuria for which the Aquilian action lies if it has directly resulted in loss. The protection of confiden-tial information is not always

absolute nor is the protection always permanently available.

The court confirmed the reasoning and conclusion of the court below that in this case, the processes adopted by Pexmart and Henn were dissimilar to those employed by the Mocke Construction. Henn’s failure to testify was another factor that counted against Pexmart and Henn. He was at the centre of the dispute. The affidavits he filed were emphatic in their denial of material aspects of the respondents’ case. The material assertions by him in the answering affidavit filed on his behalf ought to have been testified to during the trial. His failure to testify was rightly held against Pexmart and Henn.

The court held that Pexmart and Henn made unlawful use of Mocke Construction’s confidential information and trade secrets. The appeal was dismissed with costs.

Constitutional lawUpgrading of Land Tenure Rights Act: In Rahube v Ra-

hube and Others 2019 (2) SA 54 (CC); 2019 (1) BCLR 125 (CC) the court had to confirm an order of invalidity from the High Court with regards to s 2(1) of the Upgrading of Land Tenure Rights Act 112 of 1991 (the Upgrading Act). The High Court declared it invalid to the extent that it automatically converted the holders of land tenure rights into owners of the property, without providing other oc-cupants or affected parties with an opportunity to make submissions.

Ms Rahube (applicant) was the sister of Mr Rahube (re-spondent). Ms Rahube moved into the property in question, and lived there with her fam-ily (grandmother, uncle, chil-dren, brothers). Ms Rahube, once married moved out, but moved back after divorce. Mr Rahube was elected as the holder of a certificate of oc-cupation in 1987, and a deed of grant was issued in terms of proclamation R293 under the Black Administration Act 38 of 1927. The Upgrading Act automatically converted rights in property to owner-

ship rights, which led to the respondent automatically be-coming owner of the property, whether he was residing on the property or not.

The High Court held that this conversion was inher-ently gender biased because, in terms of the proclamation, women could not be the head of the family and, therefore, could not have a certificate or deed of grant registered in their name. The internal appeal procedure in s 24D of the Upgrading Act could not rescue the section, and it was, therefore, declared unconsti-tutional.

The order of invalidity was to apply retrospectively to 27 April 1994 but did not apply to cases where prop-erty has been sold to a third party or where the property had been inherited by a third party in terms of the laws of succession. The order was suspended for 18 months to allow Parliament to rectify the defect. Mr Rahube was precluded from transferring or encumbering the property.

On appeal the CC con-firmed the order of the High

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LAW REPORTS

Court. Goliath AJ held that the purpose of the Upgrading Act is to provide recognition and security of rights that had been previously ignored or systemically devalued. The Upgrading Act sought to address the pre-existing inequitable access. The au-tomatic upgrading did not achieve this purpose since it effectively excluded African women from the benefit of the legal protection.

The court further held out that it is clear from the his-torical context of the provi-sion, coupled with the word-ing (that referred only to ‘he’/‘his’ with regard to the holder), had a discrimina-tory impact on women, and is therefore against s 9 of the Constitution.• See law reports ‘land tenure’ 2018 (April) DR 40 for the GP judgment.

Customary law

Requirements of a custom-ary marriage: The facts in Sengadi v Tsambo; In re: Tsambo [2019] 1 All SA 569

(GJ) were as follows: The ap-plicant and the deceased agreed to marry in terms of customary law. On 28 Febru-ary 2016 the families met to negotiate lobolo. They agreed on lobolo of R 45 000. On sig-nature of the agreement the deceased paid R 30 000. The balance was to be paid in two instalments in future.

After the negotiations both the deceased and the appli-cant dressed up in wedding attire. The deceased’s fam-ily intended to conclude the wedding on the same day as the lobolo negotiations. The applicant was introduced as the deceased’s wife and she was welcomed into the de-ceased’s family. The event was captured by way of a vid-eo recording.

Due to the deceased’s in-fidelity and substance ad-diction the applicant moved out of the matrimonial home and stated that she will only return if the deceased goes for rehabilitation. When the deceased died the applicant moved back to their matrimo-nial home to mourn his death

but was informed that she is not welcome, and the family did not recognise her as the customary-law wife of the de-ceased.

The respondent argues that the applicant was not handed over and that this is the most crucial part of the customary marriage.

An urgent application was launched where the applicant sought the following relief –• a declaratory order confirm-ing that she is the customary wife of the deceased; • an order interdicting the re-spondent from burying the de-ceased; • a declaratory order entitling her to bury the deceased; and • a spoliation order against the respondent to restore to her the matrimonial house and other effects.

Mokgoathleng J held that the requirement of handing over the bride (integration) is discriminatory on the ground of gender and infringes on the right of dignity. Handing over (integration) cannot be regarded as an essential re-quirement in terms of s 3(1)

(b) of the Recognition of Cus-tomary Marriages Act 120 of 1998. The applicant is the customary wife of the de-ceased.

Although the applicant is entitled to bury the deceased in terms of customary law, the deceased’s family can bury him on consideration of ubuntu. The deceased was a public figure of national im-portance and was to be ac-corded a civil funeral by the provincial government of the North West, which was fund-ing the funeral.

The court refrained from making a ruling on the spolia-tion request.

ExecutionInstance when a creditor may execute against debtor’s immovable property: In Nko-la v Argent Steel Group (Pty) Ltd 2019 (2) SA 216 (SCA) the parties had been locked in lit-igation for several years. The respondent, Argent, had ob-tained judgment against Nko-la, a particularly evasive and tricky debtor, for payment of a debt of R 914 712. Argent

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applied for two immovable properties owned by Nkola to be declared specifically ex-ecutable since Nkola failed to point out sufficient movables to satisfy the judgment debt. The application was granted in the court of first instance.

Nkola appealed against this order, arguing that he has substantial movable assets in the form, largely, of shares in companies that he controls, but also expensive motor cars, and that Argent should have obtained execution in re-spect of these before seeking execution in respect of the immovable properties.

Lewis JA pointed out that it is correct that in executing a judgment, a debtor’s movable property must be attached and sold to satisfy the debt, before the creditor can pro-ceed to execute against im-movable property.

Only if the movables are insufficient to fulfil the debt may a creditor proceed against immovable property. The common-law rule is con-firmed in rr 45 and 46 of the Uniform Rules of Court.

Rule 45(3) requires the of-ficer of the court executing the order to demand payment of the debt by the debtor, and failing payment, ‘demand that so much movable and dispos-able property be pointed out as he may deem sufficient to satisfy’ the writ of execution, and failing such pointing out, search for such property.

There was no evidence be-fore the court that any mov-able assets were pointed out by Nkola to the Sheriff, despite Nkola subsequently claiming in court papers that he had sufficient movable as-sets to satisfy the judgment debt.

The common law and the court rules place no obliga-tion on a creditor to execute against movable assets where a judgment debtor has failed to point these out and make them available. In Silva v Tran-scape Transport Consultants and Another 1999 (4) SA 556 (W) the court held that r 45 did not remove the court’s discre-tion in this regard.

In the present case the fact that one of the properties was

the family home, is irrelevant as the debtor had the means to avert the sale of the home, but deliberately chose not to do so.

The appeal was dismissed with costs.

Land law

Expropriation grounds for review: In Staufen Invest-ments (Pty) Ltd v Minister of Public Works and Others 2019 (2) SA 295 (ECP); [2019] 2 All SA 258 (ECP) the appli-cant, Staufen, approached the court for an order to set aside a decision taken by the Min-ister of Public Works to ex-propriate certain rights over a portion of Staufen’s farm (in favour of Eskom). Since the decision to expropriate is an administrative act, Staufen also relied on s 6 of the Pro-motion of Administrative Jus-tice Act 3 of 2000 (PAJA).

The existing electrical sub-station was built on the farm, and remained there in terms of an unregistered servitude with previous owners. Es-kom tried to negotiate regis-

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tering the servitude against payment of compensation to Staufen, but this was refused.

When Eskom failed to reg-ister the servitude, the Minis-ter of Public Works instituted expropriation proceedings in terms of s 26(1) of the Elec-tricity Regulation Act 4 of 2006 and the Expropriation Act 63 of 1975.

Staufen argued that the uncontrolled access to the power station posed a secu-rity risk, that the power sta-tion was on a large part of his quality arable land, that the land underneath the power lines had become sterilised, that the land’s value was di-minished due to the building rubble and that the vehicles moving around was inconven-ient. Staufen wanted the sta-tion moved. Eskom refused, stating that it would be too expensive, and that the power interruption on the surround-ing communities and farms would be too disruptive. Es-kom also provided reasons why it thought the state should, instead, expropriate the property.

DE REBUS – MAY 2019

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The mining company must take all reasonable steps to exhaust the s 54 process be-fore it can apply for an inter-dict or eviction. It also cannot rely on the common law.

The MPRDA must be read together with the IPILRA as far as possible. The award-ing of the mineral right does not nullify the occupation rights under IPILRA. Since the community have rights in the land, they need to be consult-ed before their rights can be taken away.

The appeal was upheld with costs.

TrustsWhether ‘children, issue and descendants’ include adopt-ed children: In Harvey NO and Others v Crawford NO and Others 2019 (2) SA 153 (SCA) the court was asked to consider whether the words ‘children’, ‘descendants’, ‘le-gal descendants’ and ‘issue’ in a trust deed, include ‘adop-tive children’. In January 1953 one Druiff (the donor) execut-ed a notarial deed of trust and on the same day executed a Will. The provisions of the trust deed determined that the income from the trust must be applied to the benefit of the four biological children of the donor and their chil-dren. On the death of the do-nor the trust income must be divided between the children of the donor or, if any child has died, the descendants of the child.

At the time of the execu-tion of the trust deed the donor had four children of which three had children of their own. One of the donor’s daughters was married but did not have any children. She did fall pregnant on more than one occasion prior to the execution of the deed but was unable to carry the baby full term. She had informed the donor that she intended to adopt, and he responded that she should not rush into any-thing and rather wait to see what the future held.

She did, however, adopt two children after the donor’s death. There was uncertainty whether her adopted chil-dren would inherit her share in the trust after her death. The daughter approached the

Staufen, in turn, argued that Eskom was trying to regularise and legalise their occupation ex post facto, and that the expropriation was not for a legitimate public purpose as it was trying to regulate unlawful unconsti-tutional conduct as ulterior purpose.

Revelas J confirmed that the state may expropriate property within the param-eters of the law, against the payment of compensation.

The court further con-firmed that Staufen is enti-tled to administrative action that is lawful, reasonable and procedurally fair. A decision to deprive someone of their property will be arbitrary if there is not sufficient reasons for the deprivation, or if it is procedurally unfair. If there are less restrictive means to achieve the same purpose, this needs to be taken into ac-count.

If Eskom’s current occupa-tion is not regularised and they are subsequently expro-priated, this will have a sub-stantial negative impact on the electricity infrastructure. Eskom also bona fide believed that it did so in terms of a le-gal entitlement.

The obligation to pay com-pensation is a condition of ex-propriation, and not a prereq-uisite for its operation. Even if there was no determination of compensation, this does not affect the validity of the application.

Staufen’s application to re-view Eskom’s decision to ex-propriate the substation area on its farm was dismissed with costs. Staufen was or-dered to pay 80% of the costs of the application, including the costs of two counsel.

Deprivation of informal land rights: The decision in Maledu and Others v Itereleng Bakgatla Mineral Resources (Pty) Ltd and Another 2019 (2) SA 1 (CC); 2019 (1) BCLR 53 (CC) concerned the rights of a community who are living on a land on which the respond-ent mining company, Itere-leng, enjoyed mining rights.

The title deed of the land on which the mine is situated is registered in the name of the Minister of Rural Develop-ment and Land Reform, who

owns the farm in trust of the Bakgatla-Ba-Kgafela commu-nity. It is not disputed that the community holds right in the land (informal land rights) in terms of the Interim Protec-tion of Informal Land Rights Act 31 of 1996 (IPILRA).

Maledu and the other ap-pellants (on behalf of the community) claim that they occupy and own the farm in question. Itereleng is the holder of the rights to mine. The mining right was awarded to Itereleng in terms of s 23 of the Mineral and Petroleum Resources De-velopment Act 28 of 2002 (MPRDA), which included an environmental management programme in terms of s 39 of the MPRDA. A surface lease agreement was concluded with the Bakgatla-Ba-Kgafela Tribal Authority, which ena-bled the mining company to start full-scale mining opera-tions on the farm, infringing the applicants’ peaceful and undisturbed occupation. The community obtained a spolia-tion order against the mining company, which prompted the mining company to ap-ply for an eviction order and an interdict to prevent them from re-entering the land.

The community opposed this eviction application, claiming that they were not consulted by the mining com-pany as is required in terms of s 2(1) of IPILRA. They have also not consented to being deprived of their informal rights to the farm, and the rights were not validly extin-guished. They argued that in terms of s 25(2)(d) of the MPR-DA, the mine did not comply with all the applicable laws. They also question the valid-ity of the mining right, stating that they were never consult-ed during the process of the award of the mining right. Fi-nally, the community argued that the interdict should fail, as there was a mechanism in the MPRDA in s 54 to resolve disputes in respect of the sur-face rights, which had not yet been exhausted.

The court a quo rejected the community’s arguments and granted an eviction order and an interdict against them.

The CC, per Petse AJ (Zon-do DCJ, Dlodlo AJ, Frone-man J, Goliath AJ, Jafta J,

Khampepe J, Madlanga J and Theron J concurring), pointed out that the core issue turned on s 54 of the MPRDA and s 2 of IPILRA. The question was whether s 54 of the MPR-DA is available to Itereleng, and if so, whether the section precludes Itereleng from ob-taining an interdict before ex-hausting the mechanisms in s 54. The question that hinges on this is then also whether the community consented to being deprived of their infor-mal land rights or interests in the farm.

The objects of the MPRDA are set out in s 2, which recog-nises the custodianship of the country’s minerals vesting in the state. The state must en-sure that the resources are exploited for the benefit of the nation as a whole.

A mining right confers on its holder certain limited rights with respect to the mineral and land to which it relates. It gives the holder a right to enter onto the land and to do what is necessary to exercise the mining right. It mimics the common law in that respect. The exercise of these rights is subject to oth-er provisions of the MPRDA.

Section 22(4)(b) of the MPRDA imposes a duty on a person applying for a mining right to consult with the land-owner, lawful occupier or any interested or affected party, and to include the outcome of such consultation in the rel-evant environmental reports. This then places an obligation on obtaining consent from the affected person(s).

Section 2 of IPILRA protects people with any informal right in land from the depri-vation of such a right, unless there was consent in terms of the customs and usages of the community or where the right is expropriated (and compensation paid).

Section 54(1) of the MPRDA obliges the Regional Manager appointed by the Director-General (Minerals and Energy) to be notified if the holder is prevented from commencing mining operations because the lawful occupier refuses entry. This section aims to balance the rights of the min-ing right holder and those whose surface rights are af-fected.

LAW REPORTS

DE REBUS – MAY 2019

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WCC for declaratory relief. The trustees opposed the ap-plication. Relief was denied, but permission to appeal granted. After the appeal was granted the first applicant died and was substituted by the executor of her estate (Harvey).

Harvey argued that the do-nor had the intention to in-clude the adopted children.

In a majority decision Pon-nan JA (Tshiqi JA, Zondi JA and Dambuza AJ concur-ring) held that the trust deed speaks from the time it was executed and must be inter-preted as at that time. The intention of the donor must be determined from the ordi-nary grammatical meaning of the language used in the cir-cumstances that existed then. Subsequent events cannot be used to alter the intention.

The Children’s Act 31 of 1937 (the 1937 Act) was still in force at the time of the ex-

ecution of the deed. Under s 71(2)(a) of the 1937 Act, adopted children were not entitled to any property if the instrument was executed pri-or to the adoption, unless the instrument clearly conveyed the intention that property should devolve on an adopted child.

The donor was aware that the first applicant might not be able to bear children when he executed the deed. He made express provision for the eventuality that one or more of his children might die without issue, but did not make any provision for adoptive children. The deed was drafted by a professional person, probably a legal prac-titioner, and they would have advised the donor that he specifically needed to include adopted children in the deed. The donor’s omission is in-dicative that he had no such intention.

By employing the words ‘children’, ‘descendants’, ‘is-sue’, and ‘legal descendants’ the donor did not intend to benefit adopted descendants.

A clear distinction must be drawn between public and private trusts when determin-ing freedom of testation. In the public sphere a trust may not be allowed to discrimi-nate, however, in the private sphere emphasis should be placed on freedom of testa-tion. The freedom of testation is guaranteed in the Constitu-tion. Freedom of testation protects an individual’s right not only to unconditionally dispose of his property but also to choose his beneficiar-ies.

Where a beneficiary has been excluded he cannot challenge the disinheritance on constitutional grounds. However, this does not apply where a beneficiary has been included subject to a condi-

tion attached to the benefit if such a condition is contrary to public policy. The deed was executed in 1953 and was not against public policy at the time.

The appeal was dismissed with costs.• See law reports ‘Wills and trusts’ 2018 (Jan/Feb) DR 36 for the WCC judgment.

Other casesApart from the cases and top-ics that were discussed or re-ferred to above, the material under review also contained cases dealing with: Adminis-tration of estates, Legal Prac-titioners’ Fidelity Fund, civil procedure, constitutional law, contracts, criminal law, delict, development of land, family law, loss of income, medicine, minerals, motor-vehicle acci-dents, land reform, prescrip-tion, property, provisional sentence and servitudes.

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New legislation

Legislation published from 1 – 28 March 2019

Philip Stoop BCom LLM (UP) LLD (Unisa) is an associate professor in the department of mercantile law at Unisa.

BillsNational Minimum Wage Amendment Bill B9 of 2019.

Commencement of ActsElectoral Laws Amendment Act 1 of 2019. Commencement: 6 March 2019. Proc11 GG42289/6-3-2019 (also avail-able in Afrikaans).Courts of Law Amendment Act 7 of 2017, s 14. Commencement of s 14: 11 March 2019. Proc R12 GG42297/11-3-2019 (insertion of s 23A in Superior Courts Act 10 of 2013) (also available in Afrikaans).Financial Sector Regulation Act 9 of 2017. Amended and extended com-

mencement dates: See various dates in GenN142 GG42314/18-3-2019. Public Audit Amendment Act 5 of 2018. Commencement: 1 April 2019. Proc13 GG42317/18-3-2019 (also available in Afrikaans).Co-operatives Amendment Act 6 of 2013. Commencement: 1 April 2019. Proc14 GG42320/19-3-2019 (also avail-able in Afrikaans).Labour Laws Amendment Act 10 of 2018, ss 9 and 10. Commencement: 1 March 2019. GN R509 GG42345/28-3-2019 (also available in Afrikaans).

Selected list of delegated legislationAgricultural Pests Act 36 of 1983

Amendment of control measures. GN R275 GG42260/1-3-2019.Agricultural Product Standards Act 119 of 1990 Amendment of regulations regarding in-spections and appeals: Export. GN R278 GG42260/1-3-2019.Auditing Profession Act 26 of 2005Registration of registered auditors and candidate auditors. BN31 GG42304/15-3-2019.Conservation of Agricultural Resourc-es Act 43 of 1983Declaration of Bankrupt Bush (seriphium plumosum) in all provinces of the Repub-lic of South Africa as an indicator of bush encroachment. GN434 GG42323/22-3-2019.

NEW LEGISLATION

DE REBUS – MAY 2019

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Division of Revenue Amendment Act 14 of 2018 Amendment of allocations. GN430 GG42318/18-3-2019.Electoral Act 73 of 1998National and provincial elections of 8 May 2019: Official list of voting stations. GenN120 GG42281/5-3-2019.National and provincial elections of 8 May 2019: Official list of mobile voting stations. GenN121 GG42281/5-3-2019.Amendment to the regulations concern-ing the submission of lists of candidates, 2004. GN373 GG42289/6-3-2019.Amendment to the Election Regulations, 2004. GN371 GG42289/6-3-2019.Amendment to the Voter Registration Regulations, 1998. GN372 GG42289/6-3-2019.Income Tax Act 58 of 1962 Determination of the daily amount in re-spect of meals and incidental costs for purposes of s 8(1). GN268 GG42258/1-3-2019 (also available in Afrikaans).Independent Communications Author-ity of South Africa Act 13 of 2000 Community Broadcasting Services Regu-lations. GN439 GG42323/22-3-2019.Position paper on Unreserved Postal Ser-vices. GN438 GG42323/22-3-2019.Labour Relations Act 66 of 1995Repeal of Code of Good Practice on Picketing (replace by the Code of Good Practice: Collective Bargaining, Industrial Action and Picketing in 2018). GN R279 GG42260/1-3-2019.Amendment of regulations (LRA Form 3.6A). GN R468 GG42335/27-3-2019.

Magistrates’ Courts Act 32 of 1944Variation of the Northern Cape Re-gional Division. GN507 GG42343/28-3-2019.Creation of magisterial districts, sub-districts and establishment of district courts for the Western Cape. GenN185 GG42343/28-3-2019.

National Environmental Management Act 107 of 1998Generic environmental management pro-gramme relevant to applications for sub-station and overhead electricity trans-mission and distribution infrastructure which require environmental authorisa-tion. GN435 GG42323/22-3-2019.National Environmental Management: Integrated Coastal Management Act 24 of 2008Coastal waters discharge permit regula-tions. GN382 GG42304/15-3-2019.National Qualifications Framework Act 67 of 2008Amendment of the National Policy and Criteria for the Implementation of Recognition of Prior Learning. GN432 GG42319/19-3-2019. National Small Enterprise Act 102 of 1996 Revised sch 1 of the definition of small enterprise. GN399 GG42304/15-3-2019.

Nursing Act 33 of 2005 Categories of persons to be registered to practice nursing. GN402 GG42308/14-3-2019 (also available in isiZulu and Se-pedi).Pharmacy Act 53 of 1974Good pharmacy education standards. BN32 GG42304/15-3-2019.Plant Improvement Act 53 of 1976Amendment of the regulations relat-ing to establishments, varieties, plants and propagating material. GN253 GG42258/1-3-2019.Public Service Act 103 of 1994Improvement in conditions of service: Equalisation of notches for pay progres-sion for educator employed in terms of Employment of Educators Act 76 of 1998 from 1 July 2018. GN381 GG42304/15-3-2019.Road Traffic Management Corporation Act 20 of 1999 Increase in transaction fees to be paid to the Road Traffic Management Corpora-tion. GN376 GG42291/8-3-2019.

Rules Board for Courts of Law Act 107 of 1985 Designation of Magistrates’ Courts for the implementation of Mediation Rules. GN508 GG42344/28-3-2019.

Skills Development Act 97 of 1998 Promulgation of the National Skills De-velopment Plan 2030 (NSDP). GN375 GG42290/7-3-2019.Small Claims Courts Act 61 of 1984Determination of monetary jurisdiction for purposes of ss 15 and 16 (R 20 000). GN296 GG42282/5-3-2019.Special Economic Zones Act 16 of 2014Designation by the Minister of Trade and Industry in terms of s 24 of the Act of the Nkomazi Special Economic Zone. GN446 GG42323/22-3-2019.Sugar Act 9 of 1978Sugar Industry Agreement, 2000: Varie-ties of sugar cane approved for planting commencing 1 April 2019 exclusively in control areas. GN269 GG42258/1-3-2019.Value-Added Tax Act 89 of 1991Regulations prescribing electronic ser-vices for the purpose of the definition of ‘electronic services’ in s 1 of the Act. GN429 GG42316/18-3-2019.

Draft BillsDraft Feeds and Pet Food Bill. GN291 GG42275/4-3-2019.

Draft delegated legislationAmendment of reg 17 of the Numbering Plan Regulations, 2016 in terms of the Independent Communications Authority of South Africa Act 13 of 2000 to har-monize the short code ‘116’ for child helpline services for comment. GN289 GG42272/1-3-2019.Proposed rates in terms of the Landscape

Architectural Profession Act 45 of 2000 for comment. BN22 GG42258/1-3-2019.Proposed amendments to the Johannes-burg Stock Exchange interest rate and currency derivates rules and directives in terms of the Financial Markets Act 19 of 2012. BN26 and BN27 GG42258/1-3-2019.Proposed regulations in terms of the Political Party Funding Act 6 of 2018. GenN118 GG42273/1-3-2019.Proposed regulations regarding fees for provision of aviation meteorological services in terms of the South African Weather Service Act 8 of 2001. GN R297 GG42283/5-3-2019.Revised regulations regarding fees for analysis, colour charts and appeals in terms of the Agricultural Product Stand-ards Act 119 of 1990 for comment. GN299 GG42286/8-3-2019.Draft Urgent Amendment Regulations to the Regulations in terms of the Fi-nancial Sector Regulation Act 9 of 2017. GenN143 GG42314/18-3-2019 (also available in Setswana).Draft reviewed Housing and Living Con-ditions Standard for Minerals Industry in terms of the Mineral and Petroleum Re-sources Development Act 28 of 2002 for comment. GN449 GG42326/20-3-2019.Draft amendment of the Civil Avia-tion Regulations, 2011 in terms of the Civil Aviation Act 13 of 2009. GN R467 GG42333/26-3-2019.

q

THE SA ATTORNEYS’ JOURNAL

Does the life of a rule nisi

automatically extend on

postponement of return date?

Step ahead carefully –

the uncertainty of unfair

contractS continueS

Audi alteram partem vis-à-vis precautionary suspension

Dismissalfor incapacity

Handling of trust money –

dealing with the obligations

of a trust account

legal practitioner

Another six basic universal

principles applicable to the

conduct of a candidate

legal practitioner

Clearing up theconfusion

on evictions

The High Court still has jurisdiction in

labour matters

MAY 2019

To download the latest PDF issue of the

SA Attorneys’ journal visit www.derebus.org.za/

de-rebus-pdf-download

Can you afford not to have this valueable information

at your fingertips?

DE REBUS – MAY 2019

- 26 -

Employment law update

Monique Jefferson BA (Wits) LLB (Rhodes) is an attorney at DLA Piper in Johannes-burg.

Dismissal for incapacityIn Solidarity and Another v Armaments Corporation of South Africa (SOC) Ltd and Others [2019] 3 BLLR 248 (LAC), the South African National Defence refused to renew the employee’s security clear-ance without giving reasons. Armscor then terminated the employee’s service after 30 years because the employment contract and the Defence Act 42 of 2002 required all employees to have a secu-

rity clearance. The employee challenged his termination by writing a letter to Armscor stating that he had not been provided with reasons for the refusal. Furthermore, he had not been afforded an opportunity to state his case and no pre-dismissal process had been followed with him. The employee also lodged an urgent revision of his security clearance but this remained pending.

The employee referred the matter to the Commission for Conciliation, Me-diation and Arbitration (CCMA) where it was found that the dismissal was sub-stantively and procedurally unfair. The CCMA ordered reinstatement and nine months’ backpay as no process had been followed with the employee and Arms-cor should have considered a sanction short of dismissal.

On review, the Labour Court (LC) found that the dismissal was substantively fair as the employee’s security clearance had been revoked in its entirety so he could not be accommodated elsewhere. The LC was of the view that it would be un-reasonable to expect Armscor to keep a high earning employee in employment pending the outcome of the security

clearance review process. The LC agreed that the dismissal was procedurally un-fair as no process was followed with him. The reinstatement order was accordingly replaced with an order for eight months’ compensation.

On appeal the Labour Appeal Court (LAC) had to determine whether the fail-ure to have a security clearance rendered the employee’s employment impossible due to incapacity. The LAC found that it was impossible to determine the fairness of the dismissal, while the grounds for the refusal of the security clearance were unknown. The dismissal was accordingly found to be substantively unfair as the incapacity would only be permanent if the outcome of the security clearance review process revealed that his security clearance was still denied. Furthermore, Armcsor had not been consistent as it had retained two employees without se-curity clearances in the past. The LAC, however, held that an order of reinstate-ment was not reasonably practicable or legally competent and found that com-pensation equal to 12 months’ remuner-ation was appropriate.

EMPLOYMENT LAW – LABOUR LAW

Audi alteram partem vis-à-vis precautionary suspension

Long v South African Breweries (Pty) Ltd and Others; Long v South African Breweries (Pty) Ltd and Others (CC) (un-reported case no CCT61/18, 19-1-2019) (Theron J with Mogoeng CJ, Basson AJ, Cameron J, Dlodlo AJ, Froneman J, Goli-ath AJ, Khampepe J, Mhlantla J and Petse AJ concurring).

Does an employee have an inherent right to be heard on why they should not be suspended, pending an employer’s

decision to place the employee on pre-cautionary suspension?

This was one of three questions before the Constitutional Court (CC) in a leave to appeal application. The other issues related to the fairness of the appellant’s dismissal, as well as the cost order grant-ed by the Labour Court (LC) against the appellant. However, for purposes of this article the only topic under review herein relates to the question posed above.

BackgroundThe appellant was employed by South African Breweries (SAB) as a district manager and part of his duties included overseeing all legal requirements in re-spect of SAB’s fleet of vehicles were met.

On 21 May 2013 the appellant was placed on precautionary suspension pending the outcome of an investiga-tion into a fatal accident involving one of SAB’s vehicles. The vehicle was said to be in a ‘state of disrepair and unlicensed’. SAB’s reasons for the suspension was to ensure its investigation was unhindered.

The appellant referred an unfair la-bour practice dispute to the Commis-sion for Conciliation, Mediation and Arbitration (CCMA), whereafter arbitra-tion came before the third respondent commissioner. The commissioner found that while SAB had a valid reason to suspend the appellant, its actions were nevertheless unfair in that it failed to

provide the appellant with an opportu-nity to be heard on why he should not be suspended before placing him on sus-pension. The commissioner in addition found the suspension was unreasonably long and had become punitive in nature and awarded the appellant two month’s compensation.

In setting aside the award on review, the LC found that there was no require-ment in law that an employee be afford-ed an opportunity to be heard before be-ing placed on precautionary suspension. All that is required, according to the LC, was that there is an ongoing investiga-tion and that the suspension seeks to protect the integrity of such a process.

Furthermore, the LC found that the commissioner did not properly appreci-ate the nature of the investigations and that the three-month period of suspen-sion was not unreasonable or punitive under the circumstances. Finding the commissioner’s decision unreasonable, the court set aside the award.

The appellant’s application for leave to appeal was denied so to was its peti-tion to the Labour Appeal Court.

Approaching the CC, the appellant maintained he had a right to be heard be-fore being suspended and that the LC, in making a contrary finding, went against existing case law.

In its judgment refusing leave to ap-peal on this specific point the CC, refer-

Moksha Naidoo BA (Wits) LLB (UKZN) is a practicing advocate holding chambers at the Johannesburg Bar (Sandton), as well as the KwaZulu-Natal Bar (Durban).

DE REBUS – MAY 2019

- 27 -

ring to the decisions in South African Municipal Workers’ Union obo Dlamini and Others v Mogale City Local Munici-pality and Another [2014] 12 BLLR 1236 (LC), Mashego v Mpumalanga Provincial Legislature and Others (2015) 36 ILJ 458 (LC) and Member of the Executive Council for Education, North West Provincial Gov-ernment v Gradwell (2012) 33 ILJ 2033 (LAC), held:

‘In respect of the merits, the Labour Court’s finding that an employer is not required to give an employee an oppor-tunity to make representations prior to a precautionary suspension, cannot be faulted. As the Labour Court correctly stated, the suspension imposed on the applicant was a precautionary measure,

not a disciplinary one. This is supported by Mogale, Mashego and Gradwell. Con-sequently, the requirements relating to fair disciplinary action under the LRA cannot find application. Where the sus-pension is precautionary and not puni-tive, there is no requirement to afford the employee an opportunity to make representations.

In determining whether the precau-tionary suspension was permissible, the Labour Court reasoned that the fairness of the suspension is determined by as-sessing first, whether there is a fair reason for suspension and secondly, whether it prejudices the employee. The finding that the suspension was for a fair reason, namely for an investigation

to take place, cannot be faulted. Gener-ally, where the suspension is on full pay, cognisable prejudice will be ameliorated. The Labour Court’s finding that the sus-pension was precautionary and did not materially prejudice the applicant, even if there was no opportunity for pre-sus-pension representations, is sound.’

Readers should note that an employer would be obliged to hear representation from an employee before taking a deci-sion to place the employee on precau-tionary suspension if such an obligation is found in an employment contract, em-ployer’s policy, collective agreement or government regulation.

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RECENT ARTICLES AND RESEARCH

ByMeryl Federl

Recent articles and researchPlease note that the below abbre-viations are to be found in italics at the end of the title of articles and are there to give reference to the title of the journal the article is published in. To access the ar-ticle, please contact the publisher directly. Where articles are avail-able on an open access platform, articles will be hyperlinked on the De Rebus website at www.derebus.org.za

Abbreviation Title Publisher Volume/issueCILSA Comparative and International Law

Journal of Southern AfricaJuta (2018) 51.2

DJ De Jure University of Pretoria (2018) 51.2

Obiter Obiter Nelson Mandela University (2018) 39.3

PER Potchefstroom Electronic Law Journal North West University, Faculty of Law (2019) 22 February(2019) 22 March

PLD Property Law Digest LexisNexis (2018) 23.1 December

SJ Speculum Juris University of Fort Hare (2018) 32.1

SLR Stellenbosch Law Review Juta (2018) 29.3

Accessing articles from publishers• For LexisNexis articles contact: customercare@lexisnexis.co.za for the publication details.

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Child lawBekink, M ‘Defeating the anomaly of the cautionary rule and children’s testimony – S v Haupt 2018 (1) SACR 12 (GP)’ (2018) 51.2 DJ 318.Van der Walt, G ‘Alternative care in South Africa’ (2018) 39.3 Obiter 615.Van der Westhuizen, C ‘Medical treat-ment v surgery: Where does medical treatment end and surgery begin in terms of s 129 of Children’s Act?’ (2018) 39.3 Obiter 791.

Company lawCassim, MF ‘Untangling the requirement

of good faith in the derivative action in company law (Part 2)’ (2018) 39.3 Obiter 602.

Computer law Feng, K and Papadopoulos, S ‘Student (K-12) data protection in the digital age: A comparative study’ (2018) 51.2 CILSA 261. Njotini, MN ‘Precaution against what? The electronic or e-authentication frame-works of the United Kingdom, Canada and South Africa’ (2018) 51.2 CILSA 185.

Consumer lawNewman, S and Tait, M ‘Resolving pro-vincial cross-border disputes under the

Consumer Protection Act’ (2018) 39.3 Obiter 684.

Constitutional lawMathenjwa, MJ and Mhlongo, L ‘The distinctiveness and interrelatedness of the privileges and immunities of parlia-ment: A comparison of the Namibian and South African jurisdictions’ (2018) 39.3 Obiter 768.Mbenenge, SM ‘Transformative consti-tutionalism: A judicial perspective from the Eastern Cape’ (2018) 32.1 SJ 1.Okpaluba, C ‘Prosecutorial negligence and negligent police investigation: An

DE REBUS – MAY 2019

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RECENT ARTICLES AND RESEARCH

analysis of recent Canadian and South African case law (1)’ (2018) 32.1 SJ 33.

Contract lawDu Plessis, J ‘Giving practical effect to good faith in the law of contract’ (2018) 29.3 SLR 379.

Court procedureGravett, W ‘Opening address: Powerful tool of persuasion or a waste of time?’ (2018) 51.2 DJ 194.

Credit lawRenke, S and Coetzee, H ‘The circum-stances under which section 85(a) of the National Credit Act 34 of 2005 can be utilised as an avenue to access or re-access the debt relief measures in terms of the Act’ (2018) 51.2 DJ 234.

Criminal procedureHoctor, S ‘Of housebreaking and com-mon purpose: S v Leshilo 2017 JDR 1788 (GP) 1’ (2018) 39.3 Obiter 825.Naudé, BC ‘Extra-curial statements by a non-testifying co-accused, the Canadian Supreme Court and change in South Af-rica’ (2018) 39.3 Obiter 814.Reddi, M and Ramji, B ‘Section 174 of the Criminal Procedure Act: Is it time for its abolition?’ (2018) 51.2 DJ 251.

Customary lawCotton, SR and Diala, AC ‘Silences in marriage laws in Southern Africa: Wom-en’s position in polygynous customary marriages’ (2018) 32.1 SJ 18.Jokani, M; Knoetze, E and Erasmus, D ‘A criminal law response to the harm-ful practices of Ukuthwala’ (2018) 39.3 Obiter 747.

DelictBhana, D and Samaradiwakera-Wijesund-ara, C ‘Delictual interference with a contractual relationship: Country Cloud Trading CC v MEC, Department of Infra-structure Development (CC)’ (2018) 29.3 SLR 430.

Education lawOsman, F and Wilké, J ‘Dress codes in schools: A tale of headscarves and hair-styles’ (2018) 39.3 Obiter 585.

Family lawThabane, T ‘A contract of engagement as an unenforceable pactum de contra-hendo under South African law: Distill-ing lessons for Lesotho courts’ (2018) 32.1 SJ 54.

Human rightsMadlanga, M ‘The human rights duties of companies and other private actors in South Africa’ (2018) 29.3 SLR 359.

Insolvency lawChitimira, H ‘Re-evaluating the meaning and effect of a winding up order on the

insolvent’s contracts – Ellerine Brothers v McCarthy (245/13) [2014] ZASCA 46 (1 April 2014)’ (2018) 39.3 Obiter 844.Evans, R ‘Waiving of rights to property in insolvent estates and advantage to creditors in sequestration proceedings in South Africa’ (2018) 51.2 DJ 298.Mabe, Z ‘Alternatives to bankruptcy in South Africa that provides for a dis-charge of debts: Lessons from Kenya’ (2019) 22 March PER.

International lawBarrie, GN ‘International law and indig-enous people: Self-determination, devel-opment, consent and co-management’ (2018) 51.2 CILSA 171. Ibrahim, A ‘Bridging the international gap: The role of national human rights institutions in the implementation of hu-man rights treaties in Africa’ (2018) 39.3 Obiter 701.Jones, AG ‘Intervening for democracy: The threat or use of force and crisis in The Gambia’ (2018) 51.2 CILSA 241.

Labour lawHuysamen, E ‘The future of legislated minimum wages in South Africa: Legal and economic insights’ (2018) 51.2 DJ 271.Khumalo, B ‘Extension of collective agreements in terms of section 23(1)(d) of the LRA and the “knock on effect” on the right to strike: AMCU v Chamber of Mines of South Africa CCT87/16 [2007]’ (2018) 51.2 DJ 328.Mhango, M and Lubisi, N ‘Dismissal on the grounds of refusing to cut dread-locks worn in observance of religious and cultural beliefs: Discriminatory or not?’ (2018) 32.1 SJ 8.Tenza, M ‘An evaluation of the limitation of the right to strike in terms of the law of general application in South Africa’ (2018) 29.3 SLR 471.

Mining lawMostert, H and Wilson, LA ‘Restitution and “altered priorities”: How the judici-ary balances the varying demands of transformation in the mineral resources context: A discussion of Macassar Land Claims Committee v Maccsand (CC) 2017 (4) SA 1 (SCA)’ (2018) 29.3 SLR 420.Tshoose, C and Khumalo, B ‘Using a sledgehammer to crack a nut: The scope and powers of the mine health and safe-ty inspectorate in light of Anglo Ashanti Ltd v Mbonambi (2017) 38 ILJ 614 (LC)’ (2018) 39.3 Obiter 834.

PrescriptionSchrage, E ‘The comparative legal histo-ry of limitation and prescription’ (2018) 39.3 Obiter 780.

Private international lawFredericks, EA ‘Contractual capacity and the conflict of laws in common law

jurisdictions (Part 1): The United King-dom’ (2018) 39.3 Obiter 652.Bouwers, G ‘Brexit and the implications for tacit choice of law in the United King-dom’ (2018) 39.3 Obiter 727.

Property lawBotha, M ‘No compensation after expro-priation: A legal perspective’ (2018) 23.1 December PLD.Dhliwayo, P ‘Reflecting on landowners’ right to exclude and non-owners’ access to quasi-public property: Victoria and Alfred Waterfront v Police Commissioner, Western Cape’ (2018) 32.1 SJ 66.Greyling, J ‘Urban development zone in-vestment incentives how are they made attractive’ (2018) 23.1 December PLD.Rodel, C ‘Silencing the alarm bells – a discussion of r 46A’ (2018) 23.1 Decem-ber PLD.

Public procurement lawAnthony, AM ‘Re-categorising public procurement in South Africa: Construc-tion works as a special case’ (2019) 22 February PER.

ReligionHenrico, R ‘Proselytising the regulation of religious bodies in South Africa: Sup-pressing religious freedom?’ (2019) 22 March PER.

Rule of lawNwabueze, CJ and Pofinet, D ‘The rule of law and integrity: Appraising the place and role of anti-corruption standards in the fight against corruption within the central African economic and monetary community’ (2018) 51.2 CILSA 207.

Space lawFerreira-Snyman, A ‘Cooperation in out-er space activities: South Africa’s role as a member state of the African Union and BRICS’ (2018) 51.2 CILSA 141.

Taxation lawMoosa, F ‘Are trusts holders of funda-mental rights during tax administration by SARS?’ (2018) 29.3 SLR 453.

TrustsManie, L ‘A note on the misinterpreta-tion of s 13 of the Trust Property Control Act: A proposed solution’ (2018) 39.3 Obiter 803.Lötter, M; van den Berg, G and Strydom, S ‘The express power to amend a trust deed where the trust beneficiaries have accepted the benefits reserved for them’ (2018) 51.2 DJ 215.

Meryl Federl BA HDip Lib (Wits) is an archivist at the Johannesburg Society of Advocates Library. E-mail: merylfederl@yahoo.co.uk q

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JUTA’S INDEX AND ANNOTATIONS TO THE SOUTH AFRICAN CRIMINAL LAWREPORTS 2016- 2018

JUTA’S

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SOUTHAFRIC

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CRIMIN

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JOHN G

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Employment R

ights form

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nd highlights the drastic

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by legisla

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mployment A

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elations

Act and th

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ussion

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aw at Rhodes t

o practise as a

n

advocate, and has b

een involved in m

any importa

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s counsel, ju

dge

or arbitra

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also author o

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www.jutalaw.co.za

THIRD

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UPDATED

NOVEMBER 2018

LEGAL PRACTICE

& RULES AND REGULATIONS

ACT 28 OF 2014

21,5 mm

LEGAL PRACTICE ACT

& RULES AND REGULATIONS

LEGAL PRACTICEACT & RULES AND REGULATIONS

97 8 1 4 8 5

1 2 8 8 7 8

JUJUJUTT

INININ

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JOHN G

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T HI R D

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EMPLOYM

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LEGAL PRACTICE ACT

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A joint publication of the Legal Practitioners’ Fidelity Fund and the Legal Practitioners’ Indemnity Insurance Fund NPC (A Non Profit Company, Registration No. 93/03588/08)

RISKALERTMAY 2019 NO 2/2019

EDITOR’S NOTES

Legal Practitioners’ Indemnity Insurance Fund: 1256 Heuwel Avenue, Centurion 0127• PO Box 12189, Die Hoewes 0163 • Docex 24, Centurion • Tel: 012 622 3900 Website: www.lpiif.co.za • Twitter handle: @LPIIFZA

Prescription Alert, 2nd Floor, Waalburg Building, 28 Wale Street, Cape Town 8001 • PO Box 3062, Cape Town, 8000, South Africa, Docex 149 • Tel: (021) 422 2830 • Fax: (021) 422 2990E-mail: alert@lpiif.co.za • Website: www.lpiif.co.za

Legal Practitioners’ Fidelity Fund, 5th Floor, Waalburg Building,28 Wale Street, Cape Town 8001 • PO Box 3062, Cape Town, 8000, South Africa, Docex 154 • Tel: (021) 424 5351 • Fax: (021) 423 4819E-mail: attorneys@fidfund.co.za • Website: www.fidfund.co.za

DISCLAIMERPlease note that the Risk Alert Bulletin is intended to provide general information to legal practitioners and its contents are not intended as legal advice.

IN THIS EDITION Proposed amendments to the LPIIF Master Policy

explained 1

The draft policy with the proposed changes underlined thereon 3

Thomas Harban, Editor

PROPOSED AMENDMENTS TO THE LPIIF MASTER POLICY EXPLAINED

It will be remembered that the Legal Practitioners’ In-demnity Insurance Fund NPC (LPIIF) issues one Mas-ter Policy (the policy) which

is applied to all insured legal practitioners – please refer to clause 5 of the policy for a list of who is an insured.

The LPIIF intends making amend-ments to the policy in order to:

(i) Better articulate the intention behind the affected clauses;

(ii) Remove any potential ambi-guity in the interpretation; and

(iii) Improve the dispute resolu-tion mechanism in clause 40.

It must be noted that the pro-posed amendments do not intro-duce any new exclusions and that the amount of cover (limit of in-demnity) and the deductible (ex-cess) payable remain unchanged.

The proposed amendments will come into effect on 1 July 2019. We are publishing the proposed amendments at this early stage in order to give the profession and all other stakeholders suffi-cient notice of the conditions un-der which cover is to be offered under the policy in the new in-surance scheme year commenc-ing on 1 July 2019.

Any queries and/or comments regarding the proposed amend-

ments should be directed to the LPIIF team.

The proposed amendments are as follows:

1. The name of the company has been changed from the “At-torneys Insurance Indemnity Fund NPC” to its new name, “Legal Practitioners’ Indemni-ty Insurance Fund NPC”;

2. Definitions

2.1 Definition I – reference to the Attorneys Act has been removed. Act will mean the Legal Practice Act 28 of 2014;

2.2 Definition IV – reference

2 Risk Alert Bulletin MAY 2019

EDITOR’S NOTES continued...

RISKALERT

to section 25 of the Attorneys Act has been replaced by the corresponding section, (section 53), of the Legal Practice Act providing for the continued ex-istence of the Fidelity Fund;

2.3 Definition VI – the explanatory note and the definition have been combined;

2.4 Definition IX – Cybercrime: clari-fication has been added that the hacking of any of the electronic environments is not a necessi-ty in order for the exclusion to apply. Some practitioners were, incorrectly with respect, of the view that hacking of their elec-tronic environments must have taken place before cybercrime exclusion will apply. In the event that your practice has cy-bercrime cover in place, please check the wording of that policy as well in order to ensure that there is no gap in cover;

2.5 Definition XII – Employee: ref-erence to “candidate attorneys” has been replaced with “candi-date legal practitioners” in or-der to include candidate attor-neys and pupils in line with sec-tion 1 of the Legal Practice Act. Advocates with Fidelity Fund Certificates (FFCs) will now be covered by the policy and so will their pupils;

2.6 Definition XIV - Fidelity Fund Certificate: Reference to section 42 of the old Act has been re-placed with reference the corre-sponding section (section 85)of the new Act;

2.7 Definition XX: Legal Services: Legal services relate to the con-duct of a legal practice in terms of section 33 of the Act;

2.8 Definition XXI – Practitioner: it has been clarified that ad-vocates practising in terms of section 34(2)(b) fall within the definition of practitioners in

the policy;

2.9 Definition XXIV – Risk Manage-ment Questionnaire: (1) refer-ence to “an advocate referred to in section 34(2)(b)” has been added; and (2) a clarification of when the questionnaire should be completed and where to ob-tain the information regarding the completion thereof has been included;

2.10 Definition XXVI - Senior Practi-tioner: a requirement for expe-rience in professional indemni-ty insurance law for the Senior Practitioners to whom dispute resolution referrals are made has been added;

2.11 Clause 4 – the order of the words has been changed in order for the clause to read better;

2.12 Clause 5(d) – a clarification that advocates with FFCs will be re-garded as sole practitioners for purposes of the policy has been added. This is in line with section 34(6) of the new Act. This change seeks to avoid a situation where a group of advocates with FFCs purport to practise together in some form of partnership or as-sociation and therefore assume that they are entitled to a higher limit of indemnity;

2.13 Clause 6(d) - reference to “le-gal representatives of the peo-ple...,” has been removed as it may create confusion if in-terpreted as referring to legal practitioners representing the estates referred to;

2.14 Clause 16(b) - reference to sec-tion 26 of the Attorneys Act is replaced with section 55 (the section dealing with the liability of the Fund) in the new Act;

2.15 Clause 16(m) - the words “and is part of the scope of the man-date to carry out legal services” have been added in order to clarify that when the under-

lying mandate to carry out le-gal services has been has been completed, the insurer carries no obligation to indemnify an insured who thereafter act as paymasters making payments unrelated to the legal services which had been carried out;

2.16 Clause 16(o) - where new bank account details are provided to an insured, these should first be verified in terms of Rule 53.14. Insureds failing to comply with their obligations in terms of the Rules and being defrauded into paying into incorrect accounts, and thereby losing their clients’ funds to cybercrime scams, will not be covered. This risk can be insured in the commercial mar-ket under the various types of policy available.Various prod-ucts from banks and other ser-vice providers offer facilities which can be used to verify the banking details of the intended recipients. The banking prod-ucts approved by the Fund offer a verification service;

2.17 Clause 40 – Dispute Resolution Clause – (a) we have clarified that the determination of a Se-nior Practitioner is not an arbi-tration award. This is to dispel the notion that a determina-tion can be made an order of court as if it was an arbitration award; and (b) we have removed all reference to the Short-Term Insurance Ombudsman (STIO) as that office does not have any jurisdiction over professional indemnity claims.

For ease of reference, we have in-cluded the policy with the suggested changes underlined thereon.

Thomas HarbanGeneral Manager

Telephone: (012) 622 3928Email: thomas.harban@LPIIF.co.za

Risk Alert Bulletin MAY 2019 3

RISKALERT

THE DRAFT LPIIF MASTER POLICY WITH THE PROPOSED CHANGES

PREAMBLE

The Legal Practitioners’ Fidelity Fund, as permitted by the Act, has contracted with the Insurer to provide professional indemnity insurance to the Insured, in a sustainable manner and with due regard for the interests of the public by:a) protecting the integrity, esteem, status and assets of

the Insured and the legal profession;b) protecting the public against indemnifiable and prov-

able losses arising out of Legal Services provided by the Insured, on the basis set out in this policy.

DEFINITIONS:

I Act: The Legal Practice Act 28 of 2014;II Annual Amount of Cover: The total available

amount of cover for the Insurance Year for the ag-gregate of payments made for all Claims, Approved Costs and Claimants’ Costs in respect of any Legal Practice as set out in Schedule A;

III Approved Costs: Legal and other costs incurred by the Insured with the Insurer’s prior written permis-sion (which will be in the Insurer’s sole discretion) in attempting to prevent a Claim or limit the amount a Claim;

IV Legal Practitioners’ Fidelity Fund: As referred to in section 53 of the Act;

V Bridging Finance: The provision of short-term fi-nance to a party to a Conveyancing Transaction before it has been registered in the Deeds Registry;

VI Claim: A written demand for compensation from the Insured, which arises out of the Insured’s provi-sion of Legal Services. For the purposes of this policy, a written demand is any written communication or legal document that either makes a demand for or intimates or implies an intention to demand compensation or damages from an Insured;

VII Claimant’s Costs: The legal costs the Insured is obliged to pay to a claimant by order of a court, arbi-trator, or by an agreement approved by the Insurer;

VIII Conveyancing Transaction: A transaction which:a) involves the transfer of legal title to or the reg-

istration of a real right in immovable property from one or more legal entities or natural per-sons to another; and/or

b) involves the registration or cancellation of any mortgage bond or real right over immovable property; and/or

c) is required to be registered in any Deeds Registry in the Republic of South Africa, in terms of any relevant legislation;

IX Cybercrime: Any criminal or other offence that is facilitated by or involves the use of electronic com-munications or information systems, including any device or the internet or any one or more of them. (The device may be the agent, the facilitator or the target of the crime or offence). Hacking of any of the electronic environments is not a necessity in order

for the offence or the loss to fall within this defini-tion;

X Defence Costs: The reasonable costs the Insurer or Insured, with the Insurer’s written consent, incurs in investigating and defending a Claim against an Insured;

XI Dishonest: Bears its ordinary meaning but includes conduct which may occur without an Insured’s sub-jective purpose, motive or intent, but which a rea-sonable legal practitioner would consider to be de-ceptive or untruthful or lacking integrity or conduct which is generally not in keeping with the ethics of the legal profession;

XII Employee: A person who is or was employed or en-gaged by the Legal Practice to assist in providing Legal Services. (This includes in-house legal consul-tants, associates, professional assistants, candidate legal practitioners, paralegals and clerical staff but does not include an independent contractor who is not a Practitioner.);

XIII Excess: The first amount payable by the Insured (or deductible) in respect of each and every Claim (in-cluding Claimant’s Costs) as set out in schedule B;

XIV Fidelity Fund Certificate: A certificate provided for in terms of section 85 of the Act, read with Rules 3, 47, 48 and 49 of the South African Legal Practice Council Rules (the Rules) made under the authority of section 95(1) of the Act;

XV Innocent Principal: Each present or former Princi-pal who:a) may be liable for the debts and liabilities of the

Legal Practice;b) did not personally commit or participate in com-

mitting the Dishonest, fraudulent or other crim-inal act and had no knowledge or awareness of such act;

XVI Insured: The persons or entities referred to in claus-es 5 and 6 of this policy;

XVII Insurer: The Legal Practitioners’ Indemnity Insur-ance Fund NPC, Reg. No. 93/03588/08;

XVIII Insurance Year: The period covered by the policy, which runs from 1 July of the first year to 30 June of the following year;

XIX Legal Practice: The person or entity listed in clause 5 of this policy;

XX Legal Services: Work reasonably done or advice given in the ordinary course of carrying on the business of a Legal Practice in the Republic of South Africa in ac-cordance with the provisions of section 33 of the Act. Work done or advice given on the law applicable in jurisdictions other than the Republic of South Africa are specifically excluded, unless provided by a person admitted to practise in the applicable jurisdiction;

XXI Practitioner: Any attorney, advocate referred to in Section 34(2)(b) of the Act, notary or conveyancer as defined in the Act;

XXII Prescription Alert: The computerised back-up diary system that the Insurer makes available to the legal

4 Risk Alert Bulletin MAY 2019

RISKALERTprofession;

XXIII Principal: An advocate referred in section 34(2)(b) of the Act, sole Practitioner, partner or director of a Legal Practice or any person who is publicly held out to be a partner or director of a Legal Practice;

XXIV Risk Management Questionnaire: A self-assessment questionnaire which can be downloaded from or com-pleted on the Insurer’s website (www.lpiif.co.za) and which must be completed annually by the advocate referred to in section 34(2)(b) of the Act, sole practi-tioner, senior partner, director or designated risk man-ager of the Insured as referred to in clause 5. The an-nual completion of this questionnaire is compulsory, both in terms of this policy (see clauses XXIV and 23) and the Rules made under the Act. For attorneys this is set out in point 15 of the application for a Fidelity Fund Certificate form (schedule 7A of the Rules). Ad-vocates referred to in section 34(2)(b) of the Act must also complete this questionnaire annually (see point 13 of the application for a Fidelity Fund Certificate form (schedule 7B of the Rules)).

XXV Road Accident Fund claim (RAF): A claim for com-pensation for losses in respect of bodily injury or death caused by, arising from or in any way connect-ed with the driving of a motor vehicle (as defined in the Road Accident Fund Act 56 of 1996 or any predecessor or successor of that Act) in the Republic of South Africa;

XXVI Senior Practitioner: A Practitioner with no less than 15 years’ standing in the legal profession, with expe-rience in professional indemnity insurance law;

XXVII Trading Debt: A debt incurred as a result of the un-dertaking of the Insured’s business or trade. (Trading debts are not compensatory in nature and this policy deals only with claims for compensation.) This exclu-sion includes (but is not limited to) the following:a) a refund of any fee or disbursement charged by

the Insured to a client;b) damages or compensation or payment calculated

by reference to any fee or disbursement charged by the Insured to a client;

c) payment of costs relating to a dispute about fees or disbursements charged by the Insured to a cli-ent; and/or

d) any labour dispute or act of an administrative na-ture in the Insured’s practice.

WHAT COVER IS PROVIDED BY THIS POLICY?

1. On the basis set out in this policy, the Insurer agrees to indemnify the Insured against professional legal liability to pay compensation to any third party:a) that arises out of the provision of Legal Services

by the Insured; andb) where the Claim is first made against the Insured

during the current Insurance Year.2. The Insurer agrees to indemnify the Insured for

Claimants’ Costs and Defence Costs on the basis set out in this policy.

3. The Insurer agrees to indemnify the Insured for Ap-proved Costs in connection with any Claim referred to in clause 1.

4. As set out in Clause 38, the Insurer will not indemni-fy the Insured in the current Insurance Year, if the circumstance giving rise to the Claim has previously been notified to the Insurer by the Insured in an earlier Insurance Year.

WHO IS INSURED?

5. Provided that each Principal had a Fidelity Fund Certificate at the time of the circumstance, act, er-ror or omission giving rise to the Claim, the Insurer insures all Legal Practices providing Legal Services, including:a) a sole Practitioner;b) a partnership of Practitioners;c) an incorporated Legal Practice as referred to in

section 34(7) of the Act; andd) an advocate referred to in section 34(2)(b) of Act.

For purposes of this policy, an advocate referred to in section 34(2)(b) of the Act, will be regarded as a sole practitioner.

6. The following are included in the cover, subject to the Annual Amount of Cover applicable to the Legal Practice:a) a Principal of a Legal Practice providing Legal

Services, provided that the Principal had a Fi-delity Fund Certificate at the time of the circum-stance, act, error or omission giving rise to the Claim;

b) a previous Principal of a Legal Practice provid-ing Legal Services, provided that that Principal had a Fidelity Fund Certificate at the time of the circumstance, act, error or omission giving rise to the Claim;

c) an Employee of a Legal Practice providing Legal Services at the time of the circumstance, act, er-ror or omission giving rise to the Claim;

d) the estates of the people referred to in clauses 6(a), 6(b) and 6(c);

f) subject to clause 16(c), a liquidator or trustee in an insolvent estate, where the appointment is or was motivated solely because the Insured is a Practitioner and the fees derived from such ap-pointment are paid directly to the Legal Practice.

AMOUNT OF COVER

7. The Annual Amount of Cover, as set out in Sched-ule A, is calculated by reference to the number of Principals that made up the Legal Practice on the date of the circumstance, act, error or omission giv-ing rise to the Claim.A change during the course of an insurance year in the composition of a legal practice which is a part-nership will not constitute a new legal practice for purposes of this policy and would not entitle that Legal Practice to more than one limit of indemnity in respect of that insurance year.

8. Schedule A sets out the maximum Annual Amount of Cover that the Insurer provides per Legal Prac-tice. This amount includes payment of compen-sation (capital and interest) as well as Claimant’s Costs and Approved Costs.

9. Cover for Approved Costs is limited to 25% of the Annual Amount of Cover or such other amount that the Insurer may allow in its sole discretion.

INSURED’S EXCESS PAYMENT

10. The Insured must pay the Excess in respect of each Claim, directly to the claimant or the claimant’s le-gal representatives, immediately it becomes due and payable. Where two or more Claims are made simultaneously, each Claim will attract its own Ex-

Risk Alert Bulletin MAY 2019 5

RISKALERTcess and to the extent that one or more Claims arise from the same circumstance, act, error or omission the Insured must pay the Excess in respect of each such Claim;

11. The Excess is calculated by reference to the number of Principals that made up the Legal Practice on the date of the circumstance, act, error or omission giv-ing rise to the Claim, and the type of matter giving rise to the Claim, as set out in Schedule B.

12. The Excess set out in column A of Schedule B ap-plies: a) in the case of a Claim arising out of the prescrip-

tion of a Road Accident Fund claim. This Excess increases by an additional 20% if Prescription Alert has not been used and complied with by the Insured, by timeous lodgement and service of summons in accordance with the reminders sent by Prescription Alert;

b) in the case of a Claim arising from a Conveyanc-ing Transaction.

13. In the case of a Claim where clause 20 applies, the excess increases by an additional 20%.

14. No Excess applies to Approved Costs or Defence Costs.

15. The Excess set out in column B of Schedule B applies to all other types of Claim.

WHAT IS EXCLUDED FROM COVER?

16. This policy does not cover any liability for compen-sation:a) arising out of or in connection with the Insured’s

Trading Debts or those of any Legal Practice or business managed by or carried on by the In-sured;

b) arising from or in connection with misappropri-ation or unauthorised borrowing by the Insured or Employee or agent of the Insured or of the In-sured’s predecessors in practice, of any money or other property belonging to a client or third party and/or as referred to in section 55 of the Act;

c) which is insured or could more appropriately have been insured under any other valid and collectible insurance available to the Insured, covering a loss arising out of the normal course and conduct of the business or where the risk has been guaran-teed by a person or entity, either in general or in respect of a particular transaction, to the extent to which it is covered by the guarantee. This in-cludes but is not limited to Misappropriation of Trust Funds, Personal Injury, Commercial and Cy-bercrime insurance policies;

d) arising from or in terms of any judgment or or-der(s) obtained in the first instance other than in a court of competent jurisdiction within the Republic of South Africa;

e) arising from or in connection with the provision of investment advice, the administration of any funds or taking of any deposits as contemplated in:(i) the Banks Act 94 of 1990;(ii) the Financial Advisory and Intermediary Ser-

vices Act 37 of 2002;(iii) the Agricultural Credit Act 28 of 1996 as

amended or replaced; (iv) any law administered by the Financial Sector

Conduct Authority and/or the South African

Reserve Bank and any regulations issued thereunder; or

(v) the Medical Schemes Act 131 of 1998 as amended or replaced;

f) arising where the Insured is instructed to invest money on behalf of any person, except for an in-struction to invest the funds in an interest-bearing account in terms of section 78(2A) of the Attor-neys Act 53 of 1979 and/or section 86(4) of the Act, and if such investment is done pending the conclusion or implementation of a particular mat-ter or transaction which is already in existence or about to come into existence at the time the in-vestment is made.This exclusion (subject to the other provisions of this policy) does not apply to funds which the Insured is authorised to invest in his or her capacity as executor, trustee, curator or in any similar representative capacity;

g) arising from or in connection with any fine, pen-alty, punitive or exemplary damages awarded against the Insured, or from an order against the Insured to pay costs de bonis propriis;

h) arising out of or in connection with any work done on behalf of an entity defined in the Hous-ing Act 107 of 1997 or its representative, with respect to the National Housing Programme pro-vided for in the Housing Act;

i) directly or indirectly arising from, or in connec-tion with or as a consequence of the provision of Bridging Finance in respect of a Conveyanc-ing Transaction. This exclusion does not apply where Bridging Finance has been provided for the payment of:(i) transfer duty and costs;(ii) municipal or other rates and taxes relating to

the immovable property which is to be trans-ferred;

(iii) levies payable to the body corporate or homeowners’ association relating to the im-movable property which is to be transferred;

j) arising from the Insured’s having given an un-qualified undertaking legally binding his or her practice, in matters where the fulfilment of that undertaking is dependent on the act or omission of a third party;

k) arising out of or in connection with a breach of contract unless such breach is a breach of profes-sional duty by the Insured;

l) arising where the Insured acts or acted as a busi-ness rescue practitioner as defined in section 128 (1) (d) of the Companies Act 71 of 2008;

m) arising out of or in connection with the receipt or payment of funds, whether into or from the trust account or otherwise, where that receipt or payment is unrelated to or unconnected with a particular matter or transaction which is already in existence or about to come into existence and is an essential or integral part of the scope of the mandate to carry out Legal Services, at the time of the receipt or payment and in respect of which the Insured has received a mandate;

n) arising out of a defamation Claim that is brought against the Insured;

o) arising out of Cybercrime. Losses arising out of Cybercrime will include, but not be limited

6 Risk Alert Bulletin MAY 2019

RISKALERTto, payments made into the an incorrect and/or fraudulent bank account where either the In-sured or any other party has been induced to make the payment into the incorrect bank ac-count and has failed to verify the authenticity of such bank account.For purposes of this Clause, “verify” means that the Insured must have a face to face meeting with the client and or other intended recipient of the funds. The client or other intended recipient of the funds (as the case may be), must provide the Insured with an original signed and duly commissioned affidavit confirming the instruc-tion to change their banking details and attach-ing an original stamped document from the bank confirming ownership of the account.

p) arising out of a Claim against the Insured by an entity in which the Insured and/or related or in-terrelated persons* has/have a material interest and/or hold/s a position of influence or con-trol**.* as defined in section 2(1) of the Companies Act 71 of 2008** as defined in section 2(2) of the Companies Act 71 of 2008For the purposes of this paragraph, “material interest” means an interest of at least ten (10) percent in the entity;

q) arising out of or in connection with a Claim re-sulting from:(i) War, invasion, act of foreign enemy, hostili-

ties or warlike operations (whether war is de-clared or not) civil war, mutiny, insurrection, rebellion, revolution, military or usurped power;

(ii) Any action taken in controlling, preventing, suppressing or in any way relating to the ex-cluded situations in (i) above including, but not limited to, confiscation, nationalisation, damage to or destruction of property by or under the control of any Government or Pub-lic or Local Authority;

(iii) Any act of terrorism regardless of any oth-er cause contributing concurrently or in any other sequence to the loss;For the purpose of this exclusion, terrorism includes an act of violence or any act dangerous to human life, tangible or intangible property or infrastructure with the intention or effect to influence any Government or to put the public or any section of the public in fear;

r) arising out of or in connection with any Claim resulting from:(i) ionising radiations or contamination by ra-

dio-activity from any nuclear fuel or from any nuclear waste from the combustion or use of nuclear fuel;

(ii) nuclear material, nuclear fission or fusion, nuclear radiation;

(iii) nuclear explosives or any nuclear weapon;(iv) nuclear waste in whatever form;

regardless of any other cause or event contributing concurrently or in any other sequence to the loss. For the purpose of this exclusion only, combustion includes any self-sustaining process of nuclear fission or

fusion;s) arising out of or resulting from the hazardous

nature of asbestos in whatever form or quantity; and

t) Legal Services carried out in violation of the Act and the Rules.

FRAUDULENT APPLICATIONS FOR INDEMNITY

17. The Insurer will reject a fraudulent application for indemnity.

CLAIMS ARISING OUT OF DISHONESTY OR FRAUD

18. Any Insured will not be indemnified for a Claim that arises:a) directly or indirectly from any Dishonest, fraud-

ulent or other criminal act or omission by that Insured;

b) directly or indirectly from any Dishonest, fraudu-lent or other criminal act or omission by another party and that Insured was knowingly connected with, or colluded with or condoned or acquiesced or was party to that dishonesty, fraud or other criminal act or omission.Subject to clauses 16, 19 and 20, this exclusion does not apply to an Innocent Principal.

19. In the event of a Claim to which clause 18 applies, the Insurer will have the discretion not to make any payment, before the Innocent Principal takes all reasonable action to:a) institute criminal proceedings against the alleged

Dishonest party and present proof thereof to the Insurer; and/or

b) sue for and obtain reimbursement from any such alleged Dishonest party or its or her or his estate or legal representatives;Any benefits due to the alleged Dishonest party held by the Legal Practice, must, to the extent allowable by law, be deducted from the Legal Practice’s loss.

20. Where the Dishonest conduct includes:a) the witnessing (or purported witnessing) of the

signing or execution of a document without see-ing the actual signing or execution; or

b) the making of a representation (including, but not limited to, a representation by way of a certificate, acknowledgement or other document) which was known at the time it was made to be false;The Excess payable by the Innocent Insured will be increased by an additional 20%.

21. If the Insurer makes a payment of any nature under the policy in connection with a Claim and it later emerges that it wholly or partly arose from a Dis-honest, fraudulent or other criminal act or omission of the Insured, the Insurer will have the right to re-cover full repayment from that Insured and any par-ty knowingly connected with that Dishonest, fraud-ulent or criminal act or omission.

THE INSURED’S RIGHTS AND DUTIES

22. The Insured must;a) give immediate written notice to the Insurer of

any circumstance, act, error or omission that may give rise to a Claim; and

b) notify the Insurer in writing as soon as practi-cable, of any Claim made against them, but by no later than one (1) week after receipt by the

Risk Alert Bulletin MAY 2019 7

RISKALERTInsured, of a written demand or summons/coun-terclaim or application. In the case of a late no-tification of receipt of the written demand, sum-mons or application by the Insured, the Insurer reserves the right not to indemnify the Insured for costs and ancillary charges incurred prior to or as a result of such late notification.

23. Once the Insured has notified the Insurer, the Insur-er will require the Insured to provide a completed Risk Management Questionnaire and to complete a claim form providing all information reasonably required by the Insurer in respect of the Claim. The Insured will not be entitled to indemnity until the claim form and Risk Management Questionnaire have been completed by the Insured, to the Insur-er’s reasonable satisfaction and returned to the In-surer.

24. The Insured:24.1. shall not cede or assign any rights in terms of

this policy;24.2. agrees not to, without the Insurer’s prior written

consent:a) admit or deny liability for a Claim;b) settle a Claim;c) incur any costs or expenses in connection

with a Claim unless the sum of the Claim and Claimant’s Costs falls within the Insured’s Excess;failing which, the Insurer will be entitled to reject the Claim, but will have sole discretion to agree to provide indemnity, wholly or partly.

25. The Insured agrees to give the Insurer and any of its appointed agents:25.1. all information and documents that may be

reasonably required, at the Insured’s own expense.

25.2. assistance and cooperation, which includes, but not limited to, preparing, service and filing of notices and pleadings by the Insured as specifically instructed by the Insurer at the Insurer’s expense, which expenses must be agreed to in writing.

26. The Insured also gives the Insurer or its appoint-ed agents the right of reasonable access to the In-sured’s premises, staff and records for purposes of inspecting or reviewing them in the conduct of an in-vestigation of any Claim where the Insurer believes such review or inspection is necessary.

27. Notwithstanding anything else contained in this pol-icy, should the Insured fail or refuse to provide in-formation, documents, assistance or cooperation in terms of this policy, to the Insurer or its appointed agents and remain in breach for a period of ten (10) working days after receipt of written notice to rem-edy such breach (from the Insurer or its appointed agents) the Insurer has the right to:a) withdraw indemnity; and/orb) report the Insured’s conduct to the regulator;

and/orc) recover all payments and expenses incurred by it.

For the purposes of this paragraph, written notice will be sent to the address last provided to the Insurer by the Insured and will be deemed to have been received five (5) working days after electronic transmission or posting by registered

mail.28. By complying with the obligation to disclose all doc-

uments and information required by the Insurer and its legal representatives, the Insured does not waive any claim of legal professional privilege or confidentiality.

29. Where a breach of, or non-compliance with any term of this policy by the Insured has resulted in material prejudice to the handling or settlement of any Claim against the Insured, the Insured will reimburse the Insurer the difference between the sum payable by the Insurer in respect of that Claim and the sum which would in the sole opinion of the Insurer have been payable in the absence of such prejudice. It is a condition precedent of the Insurer’s right to obtain reimbursement, that the Insurer has fully indemni-fied the Insured in terms of this policy.

30. Written notice of any new Claim must be given to:Legal Practitioners’ Indemnity Insurance Fund NPC1256 Heuwel Avenue|Centurion|0127PO Box 12189|Die Hoewes|0163Docex 24 | CenturionEmail: claims@lpiif.co.zaTel:+27(0)12 622 3900

THE INSURER’S RIGHTS AND DUTIES

31. The Insured agrees that:a) the Insurer has full discretion in the conduct of

the Claim against the Insured including, but not limited to, its investigation, defence, settlement or appeal in the name of the Insured;

b) the Insurer has the right to appoint its own legal representative(s) or service providers to act in the conduct and the investigation of the Claim;The exercise of the Insurer’s discretion in terms of a) will not be unreasonable.

32. The Insurer agrees that it will not settle any Claim against any Insured without prior consultation with that Insured. However, if the Insured does not ac-cept the Insurer’s recommendation for settlement:a) the Insurer will not cover further Defence Costs

and Claimant’s Costs beyond the date of the In-surer’s recommendation to the Insured; and

b) the Insurer’s obligation to indemnify the Insured will be limited to the amount of its recommenda-tion for settlement or the Insured’s available An-nual Amount of Cover (whichever is the lesser amount).

33. If the amount of any Claim exceeds the Insured’s available Annual Amount of Cover the Insurer may, in its sole discretion, hold or pay over such amount or any lesser amount for which the Claim can be settled. The Insurer will thereafter be under no fur-ther liability in respect of such a Claim, except for the payment of Approved Costs or Defence Costs incurred prior to the date on which the Insurer noti-fies the Insured of its decision.

34. Where the Insurer indemnifies the Insured in rela-tion to only part of any Claim, the Insurer will be re-sponsible for only the portion of the Defence Costs that reflects an amount attributable to the matters so indemnified. The Insurer reserves the right to de-termine that proportion in its absolute discretion.

35. In the event of the Insured’s material non-disclosure or misrepresentation in respect of the application for indemnity, the Insurer reserves the right to re-

8 Risk Alert Bulletin MAY 2019

RISKALERTport the Insured’s conduct to the regulator and to recover any amounts that it may have incurred as a result of the Insured’s conduct.

36. If the Insurer makes payment under this policy, it will not require the Insured’s consent to take over the Insured’s right to recover (whether in the Insur-er’s name or the name of the Insured) any amounts paid by the Insurer;

37. All recoveries made in respect of any Claim under this policy will be applied (after deduction of the costs, fees and expenses incurred in obtaining such recovery) in the following order of priority:a) the Insured will first be reimbursed for the

amount by which its liability in respect of such Claim exceeded the Amount of Cover provided by this policy;

b) the Insurer will then be reimbursed for the amount of its liability under this policy in respect of such Claim;

c) any remaining amount will be applied toward the Excess paid by the Insured in respect of such Claim.

38. If the Insured gives notice during an Insurance Year, of any circumstance, act, error or omission (or a related series of acts, errors or omissions) which may give rise to a Claim or Claims, then any Claim or Claims in respect of that/those circumstance/s, act/s, error/s or omission/s subsequently made against the Insured, will for the purposes of this policy be considered to fall within one Insurance Year, being the Insurance Year of the first notice.

39. This policy does not give third parties any rights against the Insurer.

HOW THE PARTIES WILL RESOLVE DISPUTES

40. Subject to the provisions of this policy, any dispute or disagreement between the Insured and the Insurer as to any right to indemnity in terms of this policy, or as to any matter arising out of or in connection with this policy, must be dealt with in the following order:a) written submissions by the Insured must be

referred to the Insurer’s internal complaints/dispute team at disputes@lpiif.co.za or to the address set out in clause 30 of this policy, within thirty (30) days of receipt of the written communication from the Insurer which has given rise to the dispute;

b) should the dispute not have been resolved within thirty (30) days from the date of receipt by the Insurer of the submission referred to in a), then the parties must agree on an independent Senior Practitioner who has experience in the area of professional indemnity insurance law, to whom the dispute can be referred for a determination. Failing such an agreement, the choice of such Senior Practitioner must be referred to the Chairperson of the Legal Practice Council to appoint the Senior Practitioner with the relevant experience;

c) the parties must make written submissions which will be referred for determination to the Senior Practitioner referred to in b). The costs incurred in so referring the matter and the costs of the Senior Practitioner will be borne by the

unsuccessful party;d) the determination does not have the force of an

arbitration award. The unsuccessful party must notify the successful party in writing, within thirty (30) days of the determination by the Senior Practitioner, if the determination is not acceptable to it.The procedures in a) b) c) and d) above must be completed before any formal legal action is undertaken by the parties.

SCHEDULE APERIOD OF INSURANCE: 1ST JULY 2019 TO 30TH JUNE 2020 (BOTH DAYS INCLUSIVE)

No of Principals Annual Amount of Cover for Insurance Year

1 R1 562 5002 R1 562 5003 R1 562 5004 R1 562 5005 R1 562 5006 R1 562 5007 R1 640 6258 R1 875 0009 R2 109 37510 R2 343 75011 R2 578 12512 R2 812 50013 R3 046 87514 and above R3 125 000

SCHEDULE BPERIOD OF INSURANCE: 1ST JULY 2019 TO 30TH JUNE 2020 (BOTH DAYS INCLUSIVE)

No of Principals Column AExcess for prescribed RAF* and Conveyancing Claims**

Column BExcess for all other Claims**

1 R35 000 R20 0002 R63 000 R36 0003 R84 000 R48 0004 R105 000 R60 0005 R126 000 R72 0006 R147 000 R84 0007 R168 000 R96 0008 R189 000 R108 0009 R210 000 R120 00010 R231 000 R132 00011 R252 000 R144 00012 R273 000 R156 00013 R294 000 R168 00014 and above R315 000 R180 000

*The applicable Excess will be increased by an additional 20% if Prescription Alert is not used and complied with.**The applicable Excess will be increased by an additional 20% if clause 20 of this policy applies.